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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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Paper provided by Center for Financial Studies (CFS) in its series CFS Working Paper Series with number 1998/05.

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Date of creation: 1998
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Handle: RePEc:zbw:cfswop:199805
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