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Title:Number of bank relationships: An indicator of competition, borrower quality, or just size? PDF Logo
Authors:Machauer, Achim
Weber, Martin
Issue Date:2000
Series/Report no.:CFS Working Paper 2000/06
Abstract:In this study the firms’ choice of the number of bank relationships is analyzed with respect to influential factors like borrower quality, size and the existence of a close housebank relationship. Then, the number of bank relationships is used as a proxy to examine if bank competition is reflected in loan terms. It is shown that the number of bank relationships is foremost determined by borrower size and the existence of a housebank relationship. Loan rate spreads are not effected by the number of bank relationships. However, borrowers with a small number of bank relationships provide more collateral and get more credit. These effects are amplified by a housebank relationship. Housebanks get more collateral and are ready to take a larger stake in the financing of their customers.
Subjects:Relationship banking
Bank loan terms
Internal borrower rating
JEL:G21
Persistent Identifier of the first edition:urn:nbn:de:hebis:30-9711
Document Type:Working Paper
Appears in Collections:CFS Working Paper Series, Universität Frankfurt a. M.

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