Relationship Banking and Profitability - An Empirical Survey of German Banks

25 Pages Posted: 4 Mar 2007

See all articles by Felix Schwarze

Felix Schwarze

Goethe University Frankfurt - Department of Finance; E-Finance Lab

Date Written: January 2007

Abstract

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.

Keywords: Banking, credit process, bank performance, relationship lending, housebank

JEL Classification: G21

Suggested Citation

Schwarze, Felix, Relationship Banking and Profitability - An Empirical Survey of German Banks (January 2007). Available at SSRN: https://ssrn.com/abstract=967235 or http://dx.doi.org/10.2139/ssrn.967235

Felix Schwarze (Contact Author)

Goethe University Frankfurt - Department of Finance ( email )

House of Finance
Grüneburgplatz 1
Frankfurt am Main, Hessen 60323
Germany

HOME PAGE: http://www.finance.uni-frankfurt.de/index.php?men=2&case=wimi2&id=320&lg=

E-Finance Lab ( email )

House of Finance
Grüneburgplatz 1
Frankfurt am Main, Hessen 60323
Germany

HOME PAGE: http://www.finance.uni-frankfurt.de/index.php?men=2&case=wimi2&id=320&lg=

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