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Customer Relationships and Terms of Loans: Evidence from a Pilot Survey: Note
Abstract
In August 1972 the Federal Reserve System conducted a test of a proposed questionnaire that was to be used in a subsequent large nationwide business loan survey. The large survey was never undertaken, but the test elicited considerable information about 1a072 loans made by sixty-two banks at the beginning of August 1972. The banks in the sample are distributed approximately evenly across the twelve Federal Reserve districts; they are relatively large banks that report detailed information about their positions each week. Therefore, it is possible to relate information about a bank to information about a loan and a borrower. This paper examines the relationship between loan terms recorded in the test sample and balance sheet, income statement, and other information about the borrower and the bank that was available when the loan was made. In order to distinguish variations in behavior by banks from variations in the way a representative bank evaluates loan applicants all variables are studied in two forms. Mean values of all variables for each of the sixty-two banks are analyzed in the second section of this paper. In the first section all variables are taken as deviations from those individual bank means, and thus exclude additive bank and market effects.
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“The empirical literature usually found secured lending associated with risky borrowers or with risky loans (which implies risky borrowers, since the collateral itself reduces the risk of the loan) (Orgler, 1970;Hester, 1979;Scott and Smith, 1986;Berger andUdell, 1990, 1992;Booth, 1992;Booth and Chua, 1996;Klapper, 1998).”
From The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle (1998) · cites this paper as Hester, 1979
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“…usually found secured lending associated with risky borrowers or with risky loans (which implies risky borrowers, since the collateral itself reduces the risk of the loan) (Orgler 1970, Hester 1979, Scott and Smith 1986, Berger and Udell 1990,1992, Booth 1992, Booth and Chua 1996, Klapper 1998).”
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Metadata
- Authors
- Hester, D. D.
- Corresponding author
- Hester, Donald D.
- Venue
- Journal of Money, Credit and Banking
- Publisher
- JSTOR
- Published
- 1979-08
- Volume
- 11
- Issue
- 3
- Pages
- 349
- ISSN
- 0022-2879 (ISSN-L)
- OpenAlex
- W2033183621
- Cited by
- 61
- References
- 5
- Citations by year
- 2024: 2 · 2019: 3 · 2016: 1 · 2014: 1 · 2013: 1 · 2012: 1
- FWCI
- 2.76
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Journal of money credit and banking (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Finance › Banking stability, regulation, efficiency
- Social Sciences › Business, Management and Accounting › Accounting › Banking Sector Performance and Management
- Social Sciences › Economics, Econometrics and Finance › Finance › Credit Risk and Financial Regulations
- Keywords
- corporate lending, loan terms, bank lending, borrower characteristics, bank balance sheets, bank income statement, bank heterogeneity
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