Open AccessPosted Content
Relationship Lending and Lines of Credit in Small Firm Finance
TLDR
The authors examined the role of relationship lending in small firm finance and found that borrowers with longer banking relationships pay lower interest rates and are less likely to pledge collateral, consistent with theoretical arguments that relationship lending generates valuable information about borrower quality.Abstract:
This paper examines the role of relationship lending in small firm finance. We examine price and nonprice terms of bank lines of credit (L/C) extended to small firms. Our focus on bank L/Cs allows us toe examine a type of loan contract in which the bank-borrower relationship is likely to be an important mechanism for solving asymmetric information problems associated with financing small enterprises. We find that borrowers with longer banking relationships pay lower interest rates and are less likely to pledge collateral. These results are consistent with theoretical arguments that relationship lending generates valuable information about borrower quality.read more
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Financial development and economic growth : views and agenda
Ross Levine,Ross Levine +1 more
TL;DR: The authors argued that the preponderance of theoretical reasoning and empirical evidence suggests a positive first-order relationship between financial development and economic growth, and that financial development level is a good predictor of future rates of economic growth.
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Journal ArticleDOI
Relationship Banking: What Do We Know?
TL;DR: In this paper, the authors briefly review the contemporary literature on relationship banking and discuss how relationship banking fits into the core economic services provided by banks and point at its costs and benefits.
Journal ArticleDOI
Agency Costs and Ownership Structure
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