Relationship Lending: A Survey of the Literature

16 Pages Posted: 18 Jun 2014

See all articles by Elyas Elyasiani

Elyas Elyasiani

Temple University - Department of Finance

Lawrence G. Goldberg

University of Miami - Department of Finance

Date Written: January 16, 2004

Abstract

This paper reviews the recent literature on relationship lending. First, the effect of relationship lending on firm value is examined in the context of the event studies investigating the impact of announcement of bank loans on stocks of the borrowing firms. Second, the effects on funds availability, loan rates, and collateral requirements are appraised. Third, the evidence on the impact of the length of the relationship, multiple bank relationships, and distance from the lender are assessed. Fourth, the effect of bank consolidation on relationship banking and the role of de novo banks are discussed. Finally, the effects of deregulation and technology on community banks are examined. The evidence indicates that relationships increase funds availability and reduce loan rates. The evidence on the direction and magnitude of the length of relationships is mixed and multiple relationships reduce the value of any single borrower lender relationship. Small banks can maintain the advantages of relationship banking in spite of technological changes.

Keywords: Relationship; Lending; Banking

JEL Classification: G21

Suggested Citation

Elyasiani, Elyas and Goldberg, Lawrence G., Relationship Lending: A Survey of the Literature (January 16, 2004). Journal of Economics and Business 56 (2004) 315–330. Available at SSRN: https://ssrn.com/abstract=2451142

Elyas Elyasiani (Contact Author)

Temple University - Department of Finance ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States
215-204-5881 (Phone)
215-204-5698 (Fax)

Lawrence G. Goldberg

University of Miami - Department of Finance

P.O. Box 248094
Coral Gables, FL 33124-6552
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
112
rank
240,711
Abstract Views
453
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information