R. Elsas et Jp. Krahnen, IS RELATIONSHIP LENDING SPECIAL - EVIDENCE FROM CREDIT-FILE DATA IN GERMANY, Journal of banking & finance, 22(10-11), 1998, pp. 1283-1316
The German financial market is often characterized as a bank-based sys
tem with strong bank-customer relationships. The corresponding notion
of a housebank is closely related to the theoretical idea of relations
hip lending. It is the objective of this paper to provide a direct com
parison between housebanks and ''normal'' banks as to their credit pol
icy. Therefore, we analyze a new data set, representing a random sampl
e of borrowers drawn from the credit portfolios of five leading German
banks over a period of five years. We use credit-file data rather tha
n industry survey data and, thus, focus the analysis on information th
at is directly related to actual credit decisions. In particular, we u
se bank-internal borrower rating data to evaluate borrower quality, an
d the bank's own assessment of its housebank status to control for inf
ormation-intensive relationships. The major results of our study suppo
rt the view that housebanks are able to establish a distinct behaviora
l pattern consistent with the idea of long-term commitment. We find th
at housebanks do provide liquidity insurance in situations of unexpect
ed deterioration of borrower ratings. With respect to loan pricing, we
find no evidence for intra- or intertemporal price differentiation re
lated to house banking. (C) 1998 Elsevier Science B.V. All rights rese
rved.