EconPapers    
Economics at your fingertips  
 

Lending Relationships and the Collateral Channel

Gareth Anderson (), Saleem Bahaj (), Matthieu Chavaz (), Angus Foulis () and Gabor Pinter
Additional contact information
Gareth Anderson: Centre for Macroeconomics (CFM)

No 1813, Discussion Papers from Centre for Macroeconomics (CFM)

Abstract: This paper shows that lending relationships insulate corporate investment from shocks to collateral values. We construct a novel database covering the banking relationships of UK firms, as well as those of their board members and executives. We find that the sensitivity of corporate investment to shocks to real estate collateral value is halved when the length of the bank-firm relationship increases from the 25th to the 75th percentile. This effect is substantially reduced for firms whose executives have a personal mortgage relationship with their firm’s bank. Our findings provide support for theories where collateral and private information are substitutes in mitigating credit frictions over the cycle.

New Economics Papers: this item is included in nep-ban, nep-bec and nep-eur
Date: 2018-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.centreformacroeconomics.ac.uk/Discussio ... MDP2018-13-Paper.pdf (application/pdf)

Related works:
Working Paper: Lending relationships and the collateral channel (2018) Downloads
Working Paper: Lending relationships and the collateral channel (2018) Downloads
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:cfm:wpaper:1813

Access Statistics for this paper

More papers in Discussion Papers from Centre for Macroeconomics (CFM) Contact information at EDIRC.
Bibliographic data for series maintained by Martin Hannon ().

 
Page updated 2019-04-19
Handle: RePEc:cfm:wpaper:1813