Relationship Banking and Profitability - An Empirical Survey of German Banks
Goethe University Frankfurt - Department of Finance; E-Finance Lab
The financing of German small and medium-sized enterprises (SME) is still strongly dominated by housebanks (Elsas (2005)). Based on a survey of 129 German banks we examine how the housebank relationship is reflected in the credit processes of these banks. We also pursue the hypothesis that those banks are more successful whose processes are more strongly organized according to relationship banking aspects. We found a positive correlation between the use of qualitative information (measured with two indicators) and the return on equity (ROE), which supports our hypothesis. Finally we identified three groups of banks: One group which credit processes are primarily designed under relationship banking aspects, a second group which process-design is rather arranged under transaction banking aspects and a third group with no clear focus.
Number of Pages in PDF File: 25
Keywords: Banking, credit process, bank performance, relationship lending, housebank
JEL Classification: G21working papers series
Date posted: March 4, 2007
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo7 in 1.000 seconds