Title: Relationship lending within a bank-based system: Evidence from European small business data
Authors: Degryse, Hans ×
Van Cayseele, Patrick #
Issue Date: Jan-2000
Publisher: Academic press inc
Series Title: Journal of financial intermediation vol:9 issue:1 pages:90-109
Abstract: We investigate relationship lending using detailed contract information from nearly 18,000 bank loans to small Belgian firms operating within the continental European bank-based system. Specifically, we investigate die impact of different measures of relationship strength on price and nonprice terms of the loan contract. We test for the possibility of rent shifting by banks. The evidence shows two opposing effects. On the one hand, the loan rate increases with the duration of a bank-firm relationship. On the other hand, the scope of a relationship, defined as the purchase of other information-sensitive products from a bank, decreases the loin's interest rate substantially. Relationship duration and scope thus have opposite effects on loan rates, with the latter being more important. We also find that the collateral requirement is decreasing in the duration of the relationship and increasing in its scope. Journal of Economic Literature Classification Numbers: G21, G32. (C) 2000 by Academic Press.
ISSN: 1042-9573
Publication status: published
KU Leuven publication type: IT
Appears in Collections:Research Center of Monetary and Information Economics, Leuven
× corresponding author
# (joint) last author

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