Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/237692 
Year of Publication: 
2021
Series/Report no.: 
ECB Working Paper No. 2553
Publisher: 
European Central Bank (ECB), Frankfurt a. M.
Abstract: 
This paper presents evidence that personal relationships between corporate borrowers and bank loan officers improve the outcomes of loan renegotiation. Analysing a bank reorganization in Greece in the mid-2010s, I find that firms that experience an exogenous interruption in their loan officer relationship confront three consequences: one, the firms are less likely to renegotiate their loans; two, conditional on renegotiation, the firms are given tougher loan terms; and three, the firms are more likely to alter their capital structure. These results point to the importance of lending relationships in mitigating the cost of distress for borrowers in loan renegotiations.
Subjects: 
loan renegotiation
bank branch closures
loan officers
corporate credit
JEL: 
G21
L14
E44
E58
O16
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-4553-0
Document Type: 
Working Paper

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