Bank Lines of Credit for Small Business Clients: Cash Substitution and Funding Source

Andrea Schertler (), Hubensack Carsten and Pfingsten Andreas
Additional contact information
Hubensack Carsten: Corresponding author, Professor of Integrated Financial Risk Management, Institute of Banking, Finance and Accounting (IBFR), Leuphana University, Scharnhorststr. 1, 21335 Lüneburg, Phone +49 4131 677 2147, E-mail: andrea.schertler@leuphana.de
Pfingsten Andreas: Corresponding author, Professor of Integrated Financial Risk Management, Institute of Banking, Finance and Accounting (IBFR), Leuphana University, Scharnhorststr. 1, 21335 Lüneburg, Phone +49 4131 677 2147, E-mail: andrea.schertler@leuphana.de

Zeitschrift für Bankrecht und Bankwirtschaft (ZBB) / Journal of Banking Law and Banking (JBB), 2015, vol. 27, issue 2, 84-107

Abstract: We investigate whether small business clients could use revocable credit lines, firstly, in their cash management and, secondly, as a funding source. Since the medium-size bank that provided our unique sample has the right to call these lines and charges considerably high rates for using them, we argue that these lines are particularly suitable for managing short-term liquidity needs. From our findings on how the line terms (line availability, line limit, and charged line rate) depend on a client’s liquidity-at-risk, the duration of its relationship with the bank, and its limit overdrafts, we nonetheless conclude that these lines, although they are revocable, fulfill both purposes.

Date: 2015
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.15375/zbb-2015-0202 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:zfbrbw:v:27:y:2015:i:2:p:84-107:n:2

Ordering information: This journal article can be ordered from
https://www.degruyter.com/view/j/zbb

DOI: 10.15375/zbb-2015-0202

Access Statistics for this article

Zeitschrift für Bankrecht und Bankwirtschaft (ZBB) / Journal of Banking Law and Banking (JBB) is currently edited by Johannes Köndgen

More articles in Zeitschrift für Bankrecht und Bankwirtschaft (ZBB) / Journal of Banking Law and Banking (JBB) from RWS Verlag
Bibliographic data for series maintained by Peter Golla ().