Bank credit rates across the business cycle: Evidence from a French cooperative contracts database

摘要

Financial theory indicates that bank-firm relationships can induce a hold-up problem, resulting in higher interest rates. Yet only weak empirical confirmation of this result exists. Moreover, the potential influence of the business cycle on the bank-firm relationship still requires empirical consideration. With a unique contracts data set, collected from a French cooperative bank between 1996 and 2009, this study shows that the effects of bank-firm relationships on the credit rate depend on economic conditions and that the hold-up problem is at play only during economic recessions. (C) 2017 Elsevier B.V. All rights reserved.