Do Relationship Lenders Manage Loans Differently?

49 Pages Posted: 20 Feb 2019 Last revised: 9 Aug 2019

See all articles by Jan Keil

Jan Keil

Humboldt Universität zu Berlin

Date Written: September 1, 2018


Relationship banks manage loans differently than transaction lenders. This constitutes an own channel through which lending relationships affect borrowers. Analyzing 1.5 million observations and introducing borrower-quarter, lender-quarter, and lender-borrower fixed effects, I show that loan amendments are more likely for contracts signed by relationship lenders. Such formalized contract renegotiations are largely beneficial for borrowers. To investigate differences in informal loan administration policies, I analyze situations in which covenant violations shift control rights to creditors. Utilizing a regression discontinuity design and instrumenting lending relationships with lender-borrower distances, I find reductions in investment lender-borrower relationships

Keywords: lending relationships, loan administration, credit contract amendments, technical default

JEL Classification: G20

Suggested Citation

Keil, Jan, Do Relationship Lenders Manage Loans Differently? (September 1, 2018). Available at SSRN:

Jan Keil (Contact Author)

Humboldt Universität zu Berlin ( email )



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