Citation

Discussion Paper Details

Please find the details for DP10050 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: When Arm?s Length Is Too Far. Relationship Banking over the Business Cycle

Author(s): Thorsten Beck, Ralph de Haas, Hans Degryse and Neeltje Van Horen

Publication Date: June 2014

Keyword(s): business cycle, credit constraints and relationship banking

Programme Area(s): Financial Economics

Abstract: Using a novel way to identify relationship and transaction banks, we study how banks? lending techniques affect funding to SMEs over the business cycle. For 21 countries we link the lending techniques that banks use in the direct vicinity of firms to these firms? credit constraints at two contrasting points of the business cycle. We show that relationship lending alleviates credit constraints during a cyclical downturn but not during a boom period. The positive impact of relationship lending in an economic downturn is strongest for smaller and more opaque firms and in regions where the downturn is more severe.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10050

Bibliographic Reference

Beck, T, de Haas, R, Degryse, H and Van Horen, N. 2014. 'When Arm?s Length Is Too Far. Relationship Banking over the Business Cycle'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10050