How does relationship banking influence credit financing? Evidence from the financial crisis

Christa Hainz and Manuel Wiegand

No 157, ifo Working Paper Series from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: During the financial crisis asymmetric information in credit markets became more severe. Did relationship banking help firms to avoid impaired credit financing and which credit financing problems did relationship banking help to circumvent? We use survey data for 1,139 German firms to analyze how relationship banking works. We find that it lowers the probability of higher information requirements from banks. It does not, however, help to avoid constrained availability of bank credit. If credit is granted, relationship banking makes deteriorated non-price contract terms (i.e. collateral and maturity) less likely. Its impact on interest rates is ambiguous.

JEL-codes: G01 G21 G28 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

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