Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/72466
Authors: 
Höwer, Daniel
Year of Publication: 
2013
Series/Report no.: 
ZEW Discussion Paper 13-018
Abstract: 
Do firms select their main bank relationship according to their risk or risk preferences? Relationship banking is attractive for high risk firms since it improves their access to finance and provides liquidity insurance. Low risk firms instead may not want to bear the additional costs. I employ a nested logit model to study the determinants of the main bank relationship decision by newly established German firms. I find that firms that ask for bank support in case of financial distress are more likely to choose a relationship-oriented bank, such as a public or cooperative bank. Cost sensitive firms are more likely to choose a private bank. But I find no evidence that firms select a bank according to ex ante risk. Transaction oriented banks are not able to attract low risk firms.
Subjects: 
Relationship Banking
Start-up
Entrepreneurship
Financing Choice
JEL: 
G21
G32
M13
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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