Firm-Bank Relationships: A Cross-Country Comparison

Abstract

We document the structure of firm-bank relationships for the 11 largest countries in the euro area and present new stylized facts using data from AnaCredit. We look at the number of banking relationships, reliance on the main bank, credit instruments, loan maturity, and interest rates. Firms in southern Europe borrow from more banks and obtain a lower share of credit from the main bank than those in northern Europe. They also tend to borrow more on short-term, more expensive instruments and to obtain loans with shorter maturity. The findings are consistent with the hypothesis that firms in southern Europe rely less on relationship banking and obtain credit less conducive to firm growth, in line with their smaller average size. Relationship lending does not translate into lower rates, possibly because banks appropriate part of the surplus generated by relationship lending through higher rates. Finally, assortative matching, according to which small banks specialize in supplying credit to small firms, is stronger in northern European countries.