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Discussion Paper Series 2: Banking and Financial Studies, Deutsche Bundesbank >

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http://hdl.handle.net/10419/44599
  

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dc.contributor.authorStein, Ingriden_US
dc.date.accessioned2011-03-24en_US
dc.date.accessioned2011-04-06T10:53:13Z-
dc.date.available2011-04-06T10:53:13Z-
dc.date.issued2011en_US
dc.identifier.isbn978-3-86558-689-6en_US
dc.identifier.urihttp://hdl.handle.net/10419/44599-
dc.description.abstractThis study analyzes the impact of bank relationships on a firm's cost of debt. We focus on relationships with the main bank. We find that a firm's cost of debt decreases with relationship strength, proxied by the share of bank debt provided by the main lender, but rises with relationship length. While the increase over time is weak on average, bank-dependent borrowers face a significant premium after several relationship years. Moreover, cost of debt increases with concentration in the lender's portfolio. Switching the main lender initially leads to only a small price discount on average. However, the discount is considerable for borrowers that switch and had a strong relationship to the previous main lender. Our results indicate that the information advantage acquired by the relationship bank leads to benefits for the firm, but also to potential hold-up costs in the long-term. Moreover, additional costs may result from concentration risks faced by the lender, inducing borrowers to switch to larger relationship banks.en_US
dc.language.isoengen_US
dc.publisherDeutsche Bundesbank Frankfurt am Mainen_US
dc.relation.ispartofseriesDiscussion Paper Series 2: Banking and Financial Studies 2011,04en_US
dc.subject.jelG21en_US
dc.subject.jelG32en_US
dc.subject.ddc330en_US
dc.subject.keywordLending relationshipen_US
dc.subject.keywordSMEen_US
dc.subject.keywordGerman banking systemen_US
dc.titleThe price impact of lending relationshipsen_US
dc.typeWorking Paperen_US
dc.identifier.ppn654790000en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
dc.identifier.repecRePEc:zbw:bubdp2:201104-
Appears in Collections:Discussion Paper Series 2: Banking and Financial Studies, Deutsche Bundesbank

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