Empirical determinants of relationship lending

Figures & data

Table 1. Ranking explanations of the establishment of close banking relationship

Factors definition	Frequency
Good morality of the manager	76
High share of payment transactions	61
Good access to information	51
Exclusive business	48
Long duration	47
High share of debt financing	44
High collateralization of loans.	40
Solvency	40
High business intensity	38
Influence on the management	29

Notes: Analysis of 100 relational Bank status questionnaires. Factors are sorted by descending frequency of mentioning.

Table 2. Frequency distribution of duration, share of debt financing, and number of bank relationships

Duration			Number of bank relationships			Share of debt financing
Interval	Φ, 2011	Thereof RB, 2011	Number of banks	Φ, 2011	Thereof RB, 2011	Interval	Φ, 2011	Thereof RB, 2011
	# (∑%)	# (∑%)		# (∑%)	# (∑%)		# (∑%)	# (∑%)
[2; 4]	20 (0.2)	16 (0.18)	1	53 (0.53)	49 (0.55)	[0; 0.4]	16 (0.16)	13 (0.146)
[4; 11]	49 (0.69)	44 (0.49)	2	34 (0.87)	30 (0.89)	[0.4; 0.6]	10 (0.26)	9 (0.247)
[11; 19]	15 (0.84)	15 (0.17)	3	10 (0.97)	8 (0.98)	[0.6; 0.8]	12 (0.38)	9 (0.348)
[19; 25]	4 (0.88)	4 (0.05)	4	3 (100)	2 (100)0	[0.8; 1]	62 (100)	58 (100)
[25; 33]	12 (100)	10 (0.11)	5
Mean	10.67	10.775	Mean	1.63	1.62	Mean	0.79	0.79
Std. dev	8.32	7.90	Std. dev	0.78	0.81	Std. dev	0.29	0.27
Median	9	9	Median	1	1	Median	0.94	1
No. Obs.	100	89	No. Obs.	100	89	No. Obs.	100	89

Notes: # denotes number of observations.

∑% denotes cumulated percentage points. These measures are based on the data-set of lines of credits (L/Cs) from the portfolios of several Tunisian banks in 2011.

Table 3. Definition of variable

Variable	Definition	Construction
RL	Banks self-assessment of their bank status as relational lender	Dummy
DURATION	Duration of bank–borrower relationship	Duration in years
NUMBANKS	Number of simultaneous bank relationships	–
SCOPE	Number of credit lines	–
INFO	Bank has a good access to information	Dummy, based on written explanations of relational bank attribution
SOLVENCY	The firm is creditworthy	Dummy, based on written explanations of relational bank attribution
SIZE	Firm size	ln (Sales)
AGE	Firm age	ln (Age)
AAM	Total annual movement of the current account with respect to turnover	TAM/TO
STRUCTURE	Firm capital structure	Equity/Balance sheet
FUNDING	Firm financial structure	Long- and medium-term debt/Equity
LEGAL FORM	Borrower has limited liability	Dummy

Table 4. Probit analysis of determinants of the existence of relationship lending

Expl. variables	dF/dx^b St	z	P > |z|
DURATION^c	−.004338	−0.59	0.554
NUMBANKS	−.0016971	−1.07	0.284
SOLVENCY^a	.0940076^***	2.66	0.008
AAM	.0092714	0.57	0.569
AGE	.0023886^**	2.38	0.017
SIZE	.0040851	0.98	0.329
FUNDING	.0353766^*	1.92	0.055
LEGAL FORM^a	.0287647	1.41	0.159
STRUCTURE	−.0054736	−0.33	0.740
SCOPE	−.0008517	−0.33	0.740
INFO	.0109919^**	2.33	0.020
Pseudo R^2
GOOD RATE CLASSIFICATION 90.00%
LR χ^2(12)	33.68
Prob > χ^2	0.001
Pearson (χ^2)	35.69
Prob > χ^2	1.000

Notes: Probit analysis of the existence of relationship lending. The dependent variable RL is based on bank self-assessments. For definitions of regressors see Table 3. P-values are in parentheses.

^* Significance at the 10% level.

^** Idem., 5%.

^*** Idem., 1%.

^a This is the probability that the dependent variable takes the value of 1 following the change in the explanatory variable.

^b dF/dx is the probability of the dependent variable when the binary explanatory variable changes from 0 to 1.

^c The same result was found when the period it is calculated by the number of years or its logarithm.