Determinants of bank lending performance

During the last years the lending business has come under considerable competitive pressure and bank managers often express concern regarding its profitability vis-a-vis other activities. This paper tries to empirically 
During the last years the lending business has come under considerable competitive pressure and bank managers often express concern regarding its profitability vis-a-vis other activities. This paper tries to empirically identify factors that are able to explain the financial performance of bank lending activities. The analysis is based on the CFS-data-set that has been collected in 1997 from 200 medium-sized firms. Two regressions are performed: The first is directed towards relationships between the interest rate premiums and various determining factors, the second aims at detecting relationships between those factors and the occurrence of several types of problems during the course of a credit engagement. Furthermore, the results of both regressions are used to test theoretical hypotheses regarding the impact of certain parameters on credit terms and distress probabilities. The findings are somewhat “puzzling“: First, the rating is not as significant as expected. Second, credit contracts seem to be priced lower for situations with greater risks. Finally, the results do not fully support any of three hypotheses that are often advanced to describe the role of collateral and covenants in credit contracts.
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Metadaten
Author:Ralf Ewert, Gerald Schenk
URN:urn:nbn:de:hebis:30-9395
Series (Serial Number):CFS working paper series (1998, 06)
Document Type:Working Paper
Language:English
Date of Publication (online):2005/06/03
Year of first Publication:1998
Publishing Institution:Univ.-Bibliothek Frankfurt am Main
Release Date:2005/06/03
Tag:banking ; cost of capital ; distress prediction ; finance
Source:CFS working paper ; 1998,06
HeBIS PPN:195641302
Institutes:Center for Financial Studies (CFS)
Dewey Decimal Classification:330 Wirtschaft
JEL-Classification:G21 Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure
G33 Bankruptcy; Liquidation
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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