TY  - UNPD
A1  - Elsas, Ralf
A1  - Krahnen, Jan Pieter
T1  - Collateral, relationship lending and financial distress : an empirical study on financial contracting
T2  - Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2002,17
N2  - This paper analyses the role of collateral in loan contracting when companies are financed by multiple bank lenders and relationship lending can be present. We conjecture and empirically validate that relationship lenders, who enjoy an informational advantage over arm’s-length banks, are more senior to strengthen their bargaining power in future renegotiation if borrower’s face financial distress. This deters costly conflicts between lenders and fosters workout decisions by the best informed party. Consistent with our conjecture, we find that relationship lender in general have a higher probability to be collateralized, and a higher degree of collateralization (i.e. seniority). Furthermore, we show that seniority and the status of relationship lending increases the likelihood that a bank invests in a risky workout of distressed borrowers. Both findings support the view that collateral is a strategic instrument intended to influence the bargaining position of banks. Our result further suggest that seniority and relationship lending are complementary to each other. JEL Classification: G21
T3  - CFS working paper series - 2002, 17 
KW  - relationship lending,
KW  - collateral
KW  - multiple lending
KW  - loan contract design
KW  - workouts
KW  - Darlehen
KW  - Sicherheit
Y1  - 2002
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/242
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30-53001
N1  - Erste Version unter dem Titel "Collateral, default risk, and relationship lending : an empirical study on financial contracting", 
1. version: March 12, 1999, current version: December 23, 2002
IS  - December 23, 2002
ER  -