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Bank credit rates across the business cycle: Evidence from a French cooperative contracts database

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  • Dereeper, Sébastien
  • Lobez, Frédéric
  • Statnik, Jean-Christophe

Abstract

Financial theory indicates that bank–firm relationships can induce a hold-up problem, resulting in higher interest rates. Yet only weak empirical confirmation of this result exists. Moreover, the potential influence of the business cycle on the bank–firm relationship still requires empirical consideration. With a unique contracts data set, collected from a French cooperative bank between 1996 and 2009, this study shows that the effects of bank–firm relationships on the credit rate depend on economic conditions and that the hold-up problem is at play only during economic recessions.

Suggested Citation

  • Dereeper, Sébastien & Lobez, Frédéric & Statnik, Jean-Christophe, 2020. "Bank credit rates across the business cycle: Evidence from a French cooperative contracts database," Journal of Banking & Finance, Elsevier, vol. 112(C).
    • Handle: RePEc:eee:jbfina:v:112:y:2020:i:c:s0378426617302315
    DOI: 10.1016/j.jbankfin.2017.09.016
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    Cited by:

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    2. Zhehao Huang & Zhenghui Li & Zhenzhen Wang, 2020. "Utility Indifference Valuation for Defaultable Corporate Bond with Credit Rating Migration," Mathematics, MDPI, vol. 8(11), pages 1-26, November.
    3. Bruno de Menna, 2021. "Monetary Policy, Credit Risk, and Profitability: The Influence of Relationship Lending on Cooperative Banks' Performance," Working Papers hal-03138738, HAL.

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    More about this item

    Keywords

    Banks; Business cycle; Relationship lending; Small business;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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