Relationship and transaction lending in a crisis

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• dc.contributor.author Bolton, Patrickca
• dc.contributor.author Freixas, Xavierca
• dc.contributor.author Gambacorta, Leonardoca
• dc.contributor.author Mistrulli, Paolo Emilioca
• dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
• dc.date.accessioned 2017-07-26T12:07:51Z
• dc.date.available 2017-07-26T12:07:51Z
• dc.date.issued 2013-09-01
• dc.date.modified 2017-07-23T02:15:29Z
• dc.description.abstract We study how relationship lending and transaction lending vary over the business cycle. We develop a model in which relationship banks gather information on their borrowers, which allows them to provide loans for profitable firms during a crisis. Due to the services they provide, operating costs of relationship-banks are higher than those of transaction-banks. In our model, where relationship-banks compete with transaction-banks, a key result is that relationship- banks charge a higher intermediation spread in normal times, but offer continuation-lending at more favorable terms than transaction banks to profitable firms in a crisis. Using detailed credit register information for Italian banks before and after the Lehman Brothers' default, we are able to study how relationship and transaction-banks responded to the crisis and we test existing theories of relationship banking. Our empirical analysis confirms the basic prediction of the model that relationship banks charged a higher spread before the crisis, offered more favorable continuation-lending terms in response to the crisis, and suffered fewer defaults, thus confirming the informational advantage of relationship banking.
• dc.format.mimetype application/pdfca
• dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1385
• dc.identifier.uri http://hdl.handle.net/10230/21129
• dc.language.iso eng
• dc.relation.ispartofseries Economics and Business Working Papers Series; 1385
• dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
• dc.subject.keyword relationship banking
• dc.subject.keyword transaction banking
• dc.subject.keyword crisis
• dc.subject.keyword Finance and Accounting
• dc.title Relationship and transaction lending in a crisisca
• dc.type info:eu-repo/semantics/workingPaper