Bank credit rates across the business cycle: Evidence from a French cooperative contracts database

Sébastien Dereeper, Frédéric Lobez and Jean-Christophe Statnik

Journal of Banking & Finance, 2020, vol. 112, issue C

Abstract: Financial theory indicates that bank–firm relationships can induce a hold-up problem, resulting in higher interest rates. Yet only weak empirical confirmation of this result exists. Moreover, the potential influence of the business cycle on the bank–firm relationship still requires empirical consideration. With a unique contracts data set, collected from a French cooperative bank between 1996 and 2009, this study shows that the effects of bank–firm relationships on the credit rate depend on economic conditions and that the hold-up problem is at play only during economic recessions.

Keywords: Banks; Business cycle; Relationship lending; Small business (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:112:y:2020:i:c:s0378426617302315

DOI: 10.1016/j.jbankfin.2017.09.016

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