Abstract
The German financial market is often characterized as a bank-based system with strong bank–customer relationships. The corresponding notion of a housebank is closely related to the theoretical idea of relationship lending. It is the objective of this paper to provide a direct comparison between housebanks and “normal” banks as to their credit policy. Therefore, we analyze a new data set, representing a random sample of borrowers drawn from the credit portfolios of five leading German banks over a period of five years. We use credit-file data rather than industry survey data and, thus, focus the analysis on information that is directly related to actual credit decisions. In particular, we use bank-internal borrower rating data to evaluate borrower quality, and the bank’s own assessment of its housebank status to control for information-intensive relationships. The major results of our study support the view that housebanks are able to establish a distinct behavioral pattern consistent with the idea of long-term commitment. We find that housebanks do provide liquidity insurance in situations of unexpected deterioration of borrower ratings. With respect to loan pricing, we find no evidence for intra- or intertemporal price differentiation related to housebanking.
| Item Type: | Journal article |
|---|---|
| Keywords: | Relationship lending, Housebanks, Loan price determination, Credit volume |
| Faculties: | Munich School of Management > Institute for Finance and Banking |
| Subjects: | 300 Social sciences > 330 Economics |
| ISSN: | 0378-4266 |
| Language: | English |
| Item ID: | 96435 |
| Date Deposited: | 13. Jun 2023, 06:10 |
| Last Modified: | 13. Jun 2023, 06:10 |
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