Creditor Concentration: An Empirical Investigation

72 Pages Posted: 8 Jun 2016

See all articles by Steven Ongena

Steven Ongena

University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)

Gunseli Tumer-Alkan

VU Amsterdam; Vrije Universiteit Amsterdam, School of Business and Economics

Natalja von Westernhagen

Deutsche Bundesbank

Multiple version iconThere are 2 versions of this paper

Date Written: 2007

Abstract

Most of the literature addressing multiple banking assumes equal financing shares. However, unequal, concentrated or asymmetric bank borrowing is widespread. This paper investigates the determinants of creditor concentration for German firms using a comprehensive bank-firm level dataset for the time period between 1993 and 2003. We document that lending is very often concentrated and, consequently, that relationship lending is important, not only for the small firms but also for the larger firms in our sample. However, we also find that risky, illiquid, large and leveraged firms spread their borrowing more evenly between multiple lenders. On the other hand, the degree of concentration increases with the profitability of the relationship lender. Relationship lending may spur financing provided by other banks, especially if the relationship lender is a public sector bank and if the other banks are large or do not have to tie up additional funds in capital.

Keywords: bank relationships, asymmetric financing, banking competition

JEL Classification: G33, G32, G21

Suggested Citation

Ongena, Steven R. G. and Tumer-Alkan, Gunseli and Tumer-Alkan, Gunseli and von Westernhagen, Natalja, Creditor Concentration: An Empirical Investigation (2007). Bundesbank Series 2 Discussion Paper No. 2007,15, Available at SSRN: https://ssrn.com/abstract=2794001 or http://dx.doi.org/10.2139/ssrn.2794001

Steven R. G. Ongena (Contact Author)

University of Zurich - Department of Banking and Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

NTNU Business School ( email )

Norway

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Gunseli Tumer-Alkan

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands
+31 20 5987430 (Phone)

HOME PAGE: http://https://personal.vu.nl/g.tumeralkan/

VU Amsterdam ( email )

De Boelelaan 1105
Amsterdam, 1081 HV
Netherlands

Natalja Von Westernhagen

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
43
Abstract Views
578
PlumX Metrics