Citation

Discussion Paper Details

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Title: Lending Relationships in Germany: Empirical Results from Survey Data

Author(s): Dietmar Harhoff and Timm Körting

Publication Date: June 1998

Keyword(s): Credit Rationing, Financial Intermediation and Lending relationships

Programme Area(s): Financial Economics and Industrial Organization

Abstract: We examine empirically the role of lending relationships in determining the collateral requirements, costs and availability of external funding. The data originates from a recently concluded survey of small- and medium-sized German firms. In our descriptive analysis, we explore the borrowing patterns and the concentration of borrowing from financial institutions. Using data on line of credit (L/C) interest rates, collateral requirements, and the firms? use of fast payment discounts we find that relationship variables may have some bearing on the price of external funds, but much more so on loan collateralization and availability. Firms in financial distress face comparatively high L/C interest rates and reduced credit availability.

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Bibliographic Reference

Harhoff, D and Körting, T. 1998. 'Lending Relationships in Germany: Empirical Results from Survey Data'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1917