Equilibrium loan pricing under the bank-client relationship

Greenbaum, Stuart I.; Kanatas, George; Venezia, Itzhak

doi:10.1016/0378-4266(89)90061-7

Cited by 275 publications

(174 citation statements)

References 14 publications

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“…These hypotheses summarize the contradictory predictions from the models described above. H1 is consistent with the work of Fischer (1990), Sharpe (1990), and Greenbaum et al (1989). H2 summarizes the predictions from the Petersen and Rajan (1994) and Boot and Thakor (1994) models, which obviously contradict hypothesis H1.…”

Section: Hypothesessupporting

confidence: 84%

“…However, competition can be restricted if bank and ®rm engage in a long-term relationship which gives the`house bank' an informational advantage and thus some ex post monopoly power. Greenbaum et al (1989) and Sharpe (1990) provide similar models in which long-term relationships between banks and ®rms may emerge endogenously. As in Fischer (1990), these models predict that the bank will develop informational monopoly power over`high quality' ®rms.…”

Section: Theoretical Issuesmentioning

confidence: 97%

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Lending relationships in Germany – Empirical evidence from survey data

Harhoff

Körting

1998

Journal of Banking & Finance

665

367

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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 ®rms. In our descriptive analysis, we explore the borrowing patterns and the concentration of borrowing from ®nancial institutions. Using data on L/C interest rates, collateral requirements, and the ®rm's use of fast payment discounts we ®nd that relationship variables may have some bearing on the price of external funds, but much more so on loan collateralization and availability. Firms in ®nancial distress face comparatively high L/C interest rates and reduced credit availability. Ó 1998 Elsevier Science B.V. All rights reserved.JEL classification: G21; D45

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Section: Hypothesessupporting

confidence: 84%

Section: Theoretical Issuesmentioning

confidence: 97%

Lending relationships in Germany – Empirical evidence from survey data

Harhoff

Körting

1998

Journal of Banking & Finance

665

367

View full text Add to dashboard Cite

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“…5 See e.g. Greenbaum et al (1989), Petersen/Rajan (1995), Elsas (2001, pp.56) We expect that the above arguments about credit restrictions of SMEs apply even more to ethnic entrepreneurs and in particular immigrants, which tend to have higher information opacity and credit risk than native entrepreneurs. Ethnic minorities may be financially excluded because of "socio-economic limitations when financial services appear inaccessible to specific income, social or ethnic group either because of high costs, rationing, financial illiteracy, or discrimination" or "limitations of opportunity when talented new comers with profitable projects are denied finance because they lack fixed collateral or are not well connected" (Beck/de la Torre 2006, Anderloni/Carluccio 2007.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

Financial constraints of ethnic entrepreneurship: evidence from Germany

Bruder

Neuberger

Räthke-Döppner

2011

International Journal of Entrepreneurial Behavior &Amp; Research

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This is the first attempt to test hypotheses about financial constraints of ethnic minority owned businesses in Germany. Using data from a survey among 3,000 ethnic and native entrepreneurs, we examine differences in the financing patterns between both demographic groups. We find that entrepreneurs with a migration background are more likely to be denied credit or to obtain smaller loan amounts than requested. After controlling for observed risk factors and financial relationships as explanatory variables, ethnicity plays no role in explaining differences in the probability of credit rationing. These can be rather explained by the firm's location and characteristics of the bank-customer relationship. Thus, we find no evidence for prejudicial discrimination in the loan market. Terms of use: Documents inJEL Code: G21, G32

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“…They have high a probability to switch when they face severe financial constraints which cannot be resolved by the existing bank. The longer the existence of the incumbent relationship, the higher the probability that the borrower will find another lender (Greenbaum et al, 1989).…”

Section: Introductionmentioning

confidence: 99%