Lending relationships in Germany - Empirical evidence from survey data

Harhoff, Dietmar ; Körting, Timm

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URL: http://ub-madoc.bib.uni-mannheim.de/666
URN: urn:nbn:de:bsz:180-madoc-6666
Document Type: Working paper
Year of publication: 1998
The title of a journal, publication series: None
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: G21 D45 ,
Subject headings (SWD): Deutschland , Klein- und Mittelbetrieb , Investor
Abstract: We examine empirically the role of lending relationships in determining the costs and collateral requirements for external funds. The data originate 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 L/C interest rates, collateral requirements, and the firm's 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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