Lending Relationships in Germany: Empirical Results from Survey Data

CEPR Discussion Paper No. 1917

Posted: 21 Sep 1998

See all articles by Dietmar Harhoff

Dietmar Harhoff

Max Planck Institute for Innovation and Competition; Ludwig-Maximilians-Universität München; Centre for Economic Policy Research (CEPR)

Timm Korting

ZEW – Leibniz Centre for European Economic Research - International Finance and Financial Management

Date Written: June 1998

Abstract

We examine empirically the role of lending relationships in determining the collateral requirements, costs and availability of external funding. The data originates 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 line of credit (L/C) interest rates, collateral requirements, and the firms' 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.

JEL Classification: D45, G21

Suggested Citation

Harhoff, Dietmar and Korting, Timm, Lending Relationships in Germany: Empirical Results from Survey Data (June 1998). CEPR Discussion Paper No. 1917, Available at SSRN: https://ssrn.com/abstract=129650

Dietmar Harhoff (Contact Author)

Max Planck Institute for Innovation and Competition ( email )

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+49 89 24246 599 (Fax)

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Ludwig-Maximilians-Universität München ( email )

Munich, 80539
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Timm Korting

ZEW – Leibniz Centre for European Economic Research - International Finance and Financial Management ( email )

Postfach 103443
Mannheim, D-68034
Germany
(49 621) 1235 145 (Phone)
(49 621) 1235 223 (Fax)

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