Relationship and Transaction Lending in a Crisis

Patrick Bolton, Xavier Freixas, Leonardo Gambacorta and Paolo Emilio Mistrulli

The Review of Financial Studies, 2016, vol. 29, issue 10, 2643-2676

Abstract: We study how relationship lending and transaction lending vary over the business cycle. We develop a model in which relationship banks gather information on their borrowers, allowing them to provide loans to profitable firms during a crisis. Because of the services they provide, operating costs of relationship banks are higher than those of transaction banks. Relationship banks charge a higher intermediation spread in normal times, but offer continuation lending at more favourable terms than transaction banks to profitable firms in a crisis. Using credit register information for Italian banks before and after the Lehman Brothers’ default, we test the theoretical predictions of the model.Received July 29, 2014; accepted February 20, 2016 by Editor Philip Strahan.

Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (282)

Downloads: (external link)
http://hdl.handle.net/10.1093/rfs/hhw041 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Relationship and Transaction Lending in a Crisis (2015)
Working Paper: Relationship and transaction lending in a crisis (2013)
Working Paper: Relationship and Transaction Lending in a Crisis (2013)
Working Paper: Relationship and Transaction Lending in a Crisis (2013)
Working Paper: Relationship and Transaction Lending in a Crisis (2013)
Working Paper: Relationship and transaction lending in a crisis (2013)
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:oup:rfinst:v:29:y:2016:i:10:p:2643-2676.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Review of Financial Studies is currently edited by Itay Goldstein

More articles in The Review of Financial Studies from Society for Financial Studies Oxford University Press, Journals Department, 2001 Evans Road, Cary, NC 27513 USA.. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().