TY  - UNPD
A1  - Machauer, Achim
A1  - Weber, Martin
T1  - Bank behavior based on internal credit ratings of borrowers
T2  - Institut für Kapitalmarktforschung (Frankfurt am Main): CFS working paper series ; Nr. [19]98,08
N2  - This study examines the relation of bank loan terms like interest rates, collateral, and lines of credit to borrower risk defined by the banks' internal credit rating. The analysis is not restricted to a static view. It also incorporates rating transition and its implications on the relation. Money illusion and phenomena linked with relationship banking are discovered as important factors. The results show that riskier borrowers pay higher loan rate premiums and rely more on bank finance. Housebanks obtain more collateral and provide more finance. Caused by money illusion in times of high market interest rates loan rate premiums are relatively small whereas in times of low market interest rates they are relatively high. There was no evidence for an appropriate adjustment of loan terms to rating changes. But bank market power represented by a weighted average of credit rating before and after a rating transition serves to compensate for low earlier profits caused by phenomena of interest rate smoothing. Klassifikation: G21.
T3  - CFS working paper series - 1998, 08 
KW  - bank loan terms
KW  - internal borrower rating
KW  - relationship banking
KW  - money illusion
KW  - banking
Y1  - 2005
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/4545
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30-9471
CY  - Frankfurt am Main
ER  -