IDEAS home Printed from https://ideas.repec.org/p/zbw/roswps/18.html
   My bibliography  Save this paper

SME Loan Pricing and Lending Relationships in Germany: A New Look

Author

Listed:
  • Lehmann, Erik
  • Neuberger, Doris

Abstract

Strong lending relationships between banks and small and medium-sized enterprises (SMEs) play a key role in the bank-based financial system of Germany. So far, they have been mainly described by the notion of an housebank and transactional features of long-term bank-customer relationships. The present paper takes a new look by considering also interactional variables which try to measure social relations between loan officer and firm manager. We find that these variables do affect loan pricing, but that their influence varies according to firm age and housebank status.

Suggested Citation

  • Lehmann, Erik & Neuberger, Doris, 1998. "SME Loan Pricing and Lending Relationships in Germany: A New Look," Thuenen-Series of Applied Economic Theory 18, University of Rostock, Institute of Economics.
    • Handle: RePEc:zbw:roswps:18
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/78265/1/wp018thuenen.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Campbell, N. C. G., 1985. "An interaction approach to organizational buying behavior," Journal of Business Research, Elsevier, vol. 13(1), pages 35-48, February.
    2. Elsas, Ralf & Krahnen, Jan Pieter, 1998. "Is relationship lending special? Evidence from credit-file data in Germany," Journal of Banking & Finance, Elsevier, vol. 22(10-11), pages 1283-1316, October.
    3. Mark Gertler & Simon Gilchrist, 1994. "Monetary Policy, Business Cycles, and the Behavior of Small Manufacturing Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 309-340.
    4. Swank, Job, 1996. "Theories of the Banking Firm: A Review of the Literature," Bulletin of Economic Research, Wiley Blackwell, vol. 48(3), pages 173-207, July.
    5. Bhattacharya Sudipto & Thakor Anjan V., 1993. "Contemporary Banking Theory," Journal of Financial Intermediation, Elsevier, vol. 3(1), pages 2-50, October.
    6. Berger, Allen N & Udell, Gregory F, 1995. "Relationship Lending and Lines of Credit in Small Firm Finance," The Journal of Business, University of Chicago Press, vol. 68(3), pages 351-381, July.
    7. repec:bla:buecrs:v:48:y:1996:i:3:p:173-207:a is not listed on IDEAS
    8. Marc Cowling & Roger Sugden, 1995. "Small Firm Lending Contracts: Do Banks Differentiate between Firms?," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 4(1), pages 87-98, Spring.
    9. Monika Lindner-Lehmann & Erik Lehmann & Doris Neuberger, 2005. "Kreditvergabe der Banken an kleine und mittelständische," Finance 0501006, University Library of Munich, Germany.
    10. Machauer, Achim & Weber, Martin, 1998. "Bank behavior based on internal credit ratings of borrowers," Journal of Banking & Finance, Elsevier, vol. 22(10-11), pages 1355-1383, October.
    11. Martinelli, Cesar, 1997. "Small firms, borrowing constraints, and reputation," Journal of Economic Behavior & Organization, Elsevier, vol. 33(1), pages 91-105, May.
    12. Burghof, Hans-Peter & Henschel, Claudia, 1998. "Credit information in universal banking: A clinical study," CFS Working Paper Series 1998/13, Center for Financial Studies (CFS).
    13. Altman, Edward I. & Saunders, Anthony, 1997. "Credit risk measurement: Developments over the last 20 years," Journal of Banking & Finance, Elsevier, vol. 21(11-12), pages 1721-1742, December.
    14. James Kolari & Robert Berney & Charles Ou, 1996. "Small Business Lending and Bank Profitability," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 5(1), pages 1-15, Spring.
    15. Sharpe, Steven A, 1990. "Asymmetric Information, Bank Lending, and Implicit Contracts: A Stylized Model of Customer Relationships," Journal of Finance, American Finance Association, vol. 45(4), pages 1069-1087, September.
    16. David W. Blackwell & Drew B. Winters, 1997. "Banking Relationships And The Effect Of Monitoring On Loan Pricing," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 20(2), pages 275-289, June.
    17. Doris Neu Berger, 1998. "Industrial Organization of Banking: A Review," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 5(1), pages 97-118.
    18. Blackwell, David W & Winters, Drew B, 1997. "Banking Relationships and the Effect of Monitoring on Loan Pricing," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 20(2), pages 275-289, Summer.
    19. Fama, Eugene F., 1985. "What's different about banks?," Journal of Monetary Economics, Elsevier, vol. 15(1), pages 29-39, January.
    20. Neuberger, Doris, 1995. "Diversification, collateral and economies of scale in banking: lessons from a continuous-time portfolio approach," International Review of Economics & Finance, Elsevier, vol. 4(3), pages 253-265.
    21. Petersen, Mitchell A & Rajan, Raghuram G, 1994. "The Benefits of Lending Relationships: Evidence from Small Business Data," Journal of Finance, American Finance Association, vol. 49(1), pages 3-37, March.
    22. repec:bla:jfinan:v:53:y:1998:i:5:p:1737-1758 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bogdan Constantin VORONEANU, 2013. "Current Trends In The Approach Of The Credit Relationships Between Banks And Companies," Journal of Public Administration, Finance and Law, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 3(3), pages 91-97, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lehmann, Erik & Neuberger, Doris, 2001. "Do lending relationships matter?: Evidence from bank survey data in Germany," Journal of Economic Behavior & Organization, Elsevier, vol. 45(4), pages 339-359, August.
    2. Brick, Ivan E. & Palia, Darius, 2007. "Evidence of jointness in the terms of relationship lending," Journal of Financial Intermediation, Elsevier, vol. 16(3), pages 452-476, July.
    3. Ongena, S. & Smith, D.C., 2000. "Bank relationships : A review," Other publications TiSEM 993b88a5-9a0f-42de-9cec-6, Tilburg University, School of Economics and Management.
    4. Hans Degryse & Steven Ongena, 2002. "Bank-Firm Relationships and International Banking Markets," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(3), pages 401-417.
    5. Simon Cornée, 2014. "Soft Information and Default Prediction in Cooperative and Social Banks," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 3(1), pages 89-103, June.
    6. Hakimi, Abdelaziz & Hamdi, Helmi, 2013. "The duration of bank relationships and the performance of Tunisian firms," MPRA Paper 55754, University Library of Munich, Germany, revised 2014.
    7. Kirschenmann, K., 2010. "The Dynamics in Requested and Granted Loan Terms when Bank and Borrower Interact Repeatedly," Discussion Paper 2010-63, Tilburg University, Center for Economic Research.
    8. Farinha, Luisa A. & Santos, Joao A. C., 2002. "Switching from Single to Multiple Bank Lending Relationships: Determinants and Implications," Journal of Financial Intermediation, Elsevier, vol. 11(2), pages 124-151, April.
    9. Kirschenmann, K., 2010. "The Dynamics in Requested and Granted Loan Terms when Bank and Borrower Interact Repeatedly," Other publications TiSEM 40d5005c-1626-4511-aa8a-f, Tilburg University, School of Economics and Management.
    10. Ginés Hernández-Cánovas & Pedro Martínez-Solano, 2007. "Effect of the Number of Banking Relationships on Credit Availability: Evidence from Panel Data of Spanish Small Firms," Small Business Economics, Springer, vol. 28(1), pages 37-53, January.
    11. Bodenhorn, Howard, 2003. "Short-Term Loans and Long-Term Relationships: Relationship Lending in Early America," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(4), pages 485-505, August.
    12. Hussain, Inayat & Durand, Robert B. & Harris, Mark N., 2021. "Relationship lending: A source of support or a means of exploitation?," Global Finance Journal, Elsevier, vol. 48(C).
    13. Uchida, Hirofumi & Udell, Gregory F. & Yamori, Nobuyoshi, 2012. "Loan officers and relationship lending to SMEs," Journal of Financial Intermediation, Elsevier, vol. 21(1), pages 97-122.
    14. Foroughfard, Rasoul & Rahmati, Mohammad, 2019. "The Effect of Relationship Lending on Loan Contract Terms," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 14(2), pages 133-157, April.
    15. Menkhoff, Lukas & Neuberger, Doris & Suwanaporn, Chodechai, 2006. "Collateral-based lending in emerging markets: Evidence from Thailand," Journal of Banking & Finance, Elsevier, vol. 30(1), pages 1-21, January.
    16. Amélie Artis & Simon Cornée, 2013. "Transformation informationnelle, certification et intermédiation financière : le cas de la banque solidaire," Economics Working Paper Archive (University of Rennes & University of Caen) 201326, Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS.
    17. Berger, Allen N. & Scott Frame, W. & Ioannidou, Vasso, 2011. "Tests of ex ante versus ex post theories of collateral using private and public information," Journal of Financial Economics, Elsevier, vol. 100(1), pages 85-97, April.
    18. Loukil Sahar & Jarboui Anis, 2016. "Loan officers and soft information production," Cogent Business & Management, Taylor & Francis Journals, vol. 3(1), pages 1199521-119, December.
    19. Annalisa Castelli & Gerald P. Dwyer & Iftekhar Hasan, 2006. "Bank relationships and small firms’ financial performance," FRB Atlanta Working Paper 2006-05, Federal Reserve Bank of Atlanta.
    20. Haffki, Ricarda & Mager, Ferdinand & Hennig, Kerstin, 2023. "Big is beautiful: The impact of bank–borrower relationship and sponsor size on credit spreads and underwriting fees in commercial real estate lending," Global Finance Journal, Elsevier, vol. 58(C).

    More about this item

    Keywords

    Banking; Relationship Lending; Small Business Finance;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:roswps:18. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/ivrosde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.