The Effect of Relationship Lending: Evidence from Loan Originations and Renegotiations

, UNC Chapel Hill 

, The University of 黑料传送门 Booth

The large empirical literature on relationship lending provides mixed evidence on the extent to which bank relationships increase or decrease borrowing costs. We propose contributing to the debate about the consequences of relationship lending in several important ways. First, we will use a large, hand-collected dataset of loan originations in the syndicated loan market to construct a more powerful measure of bank relationships that cleanly captures the outcome of competition across banks in the loan origination market. Second, we will examine how relationship lending affects the loan renegotiation process. Third, we will isolate the fundamental monitoring costs and monopoly forces that underpin relationship lending by carefully controlling for the effects of cross-selling services to the borrower on loan pricing.