Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/43272
Authors: 
Brunner, Antje
Krahnen, Jan Pieter
Year of Publication: 
2010
Series/Report no.: 
CFS Working Paper 2010/07
Abstract: 
This paper analyzes loan pricing when there is multiple banking and borrower distress. Using a unique data set on SME lending collected from major German banks, we can instrument for effective coordination between lenders, carrying out a panel estimation. The analysis allows to distinguish between rents that accrue due to single bank lending, rents that accrue due to relationship lending, and rents that accrue due to the elimination of competition among multiple lenders. We find the relationship lending to have no discernible impact on loan spreads, while both single lending and coordinated multiple lending significantly increase the spread. Thus, contrary to predictions in the literature, multiple lending does not insure the borrower against hold-up.
Subjects: 
Banking Competition
Coordination
Distress
Credit Spread
Hold-up
JEL: 
D74
G21
G33
G34
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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