Lending Relationships and Loan Contract Terms

@article{Bharath2011LendingRA,
  title={Lending Relationships and Loan Contract Terms},
  author={Sreedhar T. Bharath and Sandeep Dahiya and A. Saunders and A. Srinivasan},
  journal={Review of Financial Studies},
  year={2011},
  volume={24},
  pages={1141-1203}
}
We find that repeated borrowing from the same lender translates into a 10--17 bps lowering of loan spreads and that relationships are especially valuable when borrower transparency is low. These results hold using multiple approaches (propensity score matching, instrumental variables, and treatment effects model) that control for the endogeneity of relationships. We also provide a demarcation line between relationship and transactional lending. Spreads charged for relationship loans and… Expand
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