What Determines Borrowing Costs at the Firm-Level: Firm-Specific and Aggregate Information

Konferenzbeitrag

We analyze the relationship between firm-specific shocks and aggregate fluctuations. In particular, profitability of firms affected by a negative shock worsens. To the extent that the banks cannot distinguish between aggregate and firm-specific profitability shocks, they will adjust interest rates for all borrowers. We test the influence of individual and bank specific data on lending rate using individual data for firm-bank relationships in Germany between 2005 and 2007. We provide the evidence that firm lending conditions depend on both individual and aggregate profitability. This result is consistent with the interpretation that banks use firm-specific as well as aggregate information when setting corporate lending rates.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2014: Evidenzbasierte Wirtschaftspolitik - Session: Liquidity, Banks, and Borrowing Conditions: Empirical Evidence ; No. B05-V2

Classification and Topics

• Classification: Wirtschaft ; Business Fluctuations; Cycles ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Transactional Relationships; Contracts and Reputation; Networks

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fidrmuc, Jarko ; Scharler, Johann
• Event: Veröffentlichung
• (who): ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
• (where): Kiel und Hamburg
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/100322
• Last update: 10.03.2025, 11:46 AM CET