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How does relationship banking influence credit financing? Evidence from the financial crisis

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  • Christa Hainz
  • Manuel Wiegand

Abstract

During the financial crisis asymmetric information in credit markets became more severe. Did relationship banking help firms to avoid impaired credit financing and which credit financing problems did relationship banking help to circumvent? We use survey data for 1,139 German firms to analyze how relationship banking works. We find that it lowers the probability of higher information requirements from banks. It does not, however, help to avoid constrained availability of bank credit. If credit is granted, relationship banking makes deteriorated non-price contract terms (i.e. collateral and maturity) less likely. Its impact on interest rates is ambiguous.

Suggested Citation

  • Christa Hainz & Manuel Wiegand, 2013. "How does relationship banking influence credit financing? Evidence from the financial crisis," ifo Working Paper Series 157, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:ifowps:_157
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    Cited by:

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    2. Ferri, Giovanni & Murro, Pierluigi & Peruzzi, Valentina & Rotondi, Zeno, 2019. "Bank lending technologies and credit availability in Europe: What can we learn from the crisis?," Journal of International Money and Finance, Elsevier, vol. 95(C), pages 128-148.

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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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