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How does relationship banking influence credit financing? Evidence from the financial crisis

  • Christa Hainz

    ()

  • Manuel Wiegand

During the financial crisis asymmetric information in credit markets became moresevere. Did relationship banking help firms to avoid impaired credit financing andwhich credit financing problems did relationship banking help to circumvent? We usesurvey data for 1,139 German firms to analyze how relationship banking works. Wefind that it lowers the probability of higher information requirements from banks. Itdoes not, however, help to avoid constrained availability of bank credit. If credit isgranted, relationship banking makes deteriorated non-price contract terms (i.e. collateraland maturity) less likely. Its impact on interest rates is ambiguous.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-Ifo_Working_Papers/wp-ifo-2013/IfoWorkingPaper-157.pdf
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Paper provided by Ifo Institute - Leibniz Institute for Economic Research at the University of Munich in its series Ifo Working Paper Series with number Ifo Working Paper No. 157.

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Date of creation: 2013
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Handle: RePEc:ces:ifowps:_157
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  1. Beck, Thorsten & Demirguc-Kunt, Asli & Laeven, Luc & Maksimovic, Vojislav, 2006. "The determinants of financing obstacles," Journal of International Money and Finance, Elsevier, vol. 25(6), pages 932-952, October.
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  4. Boot, Arnoud W. A., 2000. "Relationship Banking: What Do We Know?," Journal of Financial Intermediation, Elsevier, vol. 9(1), pages 7-25, January.
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  8. Steven A. Sharpe, 1989. "Asymmetric information, bank lending, and implicit contracts: a stylized model of customer relationships," Finance and Economics Discussion Series 70, Board of Governors of the Federal Reserve System (U.S.).
  9. Puri, Manju & Rocholl, Jörg & Steffen, Sascha, 2011. "Global retail lending in the aftermath of the US financial crisis: Distinguishing between supply and demand effects," Journal of Financial Economics, Elsevier, vol. 100(3), pages 556-578, June.
  10. Inderst, Roman & Mueller, Holger M., 2007. "A lender-based theory of collateral," Journal of Financial Economics, Elsevier, vol. 84(3), pages 826-859, June.
  11. Hans Degryse & Partick Van cayseele, 1998. "Relationship Lending within a Bank-based System: Evidence from European Small Business Data," Working Papers Department of Economics ces9816, KU Leuven, Faculty of Economics and Business, Department of Economics.
  12. Rajan, Raghuram & Winton, Andrew, 1995. " Covenants and Collateral as Incentives to Monitor," Journal of Finance, American Finance Association, vol. 50(4), pages 1113-46, September.
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  15. Cole, Rebel A. & Goldberg, Lawrence G. & White, Lawrence J., 2004. "Cookie Cutter vs. Character: The Micro Structure of Small Business Lending by Large and Small Banks," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 39(02), pages 227-251, June.
  16. Cole, Rebel A., 1998. "The importance of relationships to the availability of credit," Journal of Banking & Finance, Elsevier, vol. 22(6-8), pages 959-977, August.
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