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Is relationship lending special? Evidence from credit-file data in Germany

  • Elsas, Ralf
  • Krahnen, Jan Pieter

The German financial market is often characterized as a bank-based system with strong bank-customer relationships. The corresponding notion of a housebank is closely related to the theoretical idea of relationship lending. It is the objective of this paper to provide a direct comparison between housebanks and normal banks as to their credit policy. Therefore, we analyze a new data set, representing a random sample of borrowers drawn from the credit portfolios of five leading German banks over a period of five years. We use credit-file data rather than industry survey data and, thus, focus the analysis on information that is directly related to actual credit decisions. In particular, we use bank-internal borrower rating data to evaluate borrower quality, and the bank's own assessment of its housebank status to control for information-intensive relationships.

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Article provided by Elsevier in its journal Journal of Banking & Finance.

Volume (Year): 22 (1998)
Issue (Month): 10-11 (October)
Pages: 1283-1316

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Handle: RePEc:eee:jbfina:v:22:y:1998:i:10-11:p:1283-1316
Contact details of provider: Web page: http://www.elsevier.com/locate/jbf

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