Relationship Lending in the Czech Republic

Adam Gersl and Petr Jakubík

Working Papers from Czech National Bank, Research and Statistics Department

Abstract: This paper presents the results of an analysis of data on individual bank loans of nonfinancial corporations in the Czech Republic taken from the CNB’s Central Credit Register. It focuses on the question of how firms obtain financing from domestic banks. The results show that the vast majority of non-financial corporations use the services of just one relationship lender. Small and young firms in technology- and knowledge-intensive industries tend to concentrate their credit needs in a single bank, whereas less creditworthy firms and firms in cyclical industries tend to borrow from more than one bank. The analysis also reveals different behaviour of firms towards financing banks in the case of multiple lenders. Finally, it turns out that the level of credit risk at bank level decreases in line with the extent to which firms applying single relationship lending occur in the bank’s portfolio.

Keywords: Credit risk; relationship banking. (search for similar items in EconPapers)
JEL-codes: G21 G32 (search for similar items in EconPapers)
Date: 2010-09
New Economics Papers: this item is included in nep-ban, nep-cfn and nep-tra
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https://www.cnb.cz/export/sites/cnb/en/economic-re ... wp/cnbwp_2010_01.pdf

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Persistent link: https://EconPapers.repec.org/RePEc:cnb:wpaper:2010/01

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