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| Author: | Bharath, S. (et al.) |
| Title: | So what do I get? The bank's view of lending relationships |
| Journal: | Journal of Financial Economics
2007 : AUG, VOL. 85:2, p. 368-419 |
| Index terms: | asymmetric information bank lending underwriting |
| Language: | eng |
| Abstract: | A relationship lender's informational advantage over a non-relationship lender may generate a higher probability of selling information-sensitive products to its borrowers. The results show that the probability of a relationship lender providing a future loan is 42%, while for a non-relationship lender, this probability is 3%. Consistent with theory, it is found that borrowers with greater information asymmetries are significantly likely to obtain future loans from their relationship lenders. Relationship lenders are likely to be chosen to provide debt/equity underwriting services, but this effect is economically small. |
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