European Journal of Business Science and Technology 2018, 4(1):5-30 | DOI: 10.11118/ejobsat.v4i1.130

Intangible Assets and the Determinants of a Single Bank Relation of German SMEs

Jarko Fidrmuc1,2, Philipp Schreiber3, Martin Siddiqui1
1 Zeppelin University Friedrichshafen, Germany
2 Mendel University in Brno, Czech Republic
3 University of Mannheim, Germany

We focus on the determinants and potential benefits of relationship banking. Based on the existing literature and the unique role intangible assets play regarding firms' capital structure, we test two hypotheses using rich data on firm-bank relationships in Germany. We show that firstly, a high share of intangible assets does not worsen the access of firms to debt financing. And secondly, firms with a high share of intangible assets are statistically significantly more likely to choose an exclusive and persistent bank relation.

Keywords: relationship banking, SME, bank lending, capital structure, intangible assets
JEL classification: C21, D82, G21, G32

Published: July 31, 2018  Show citation

ACS AIP APA ASA Harvard Chicago IEEE ISO690 MLA NLM Turabian Vancouver
Fidrmuc, J., Schreiber, P., & Siddiqui, M. (2018). Intangible Assets and the Determinants of a Single Bank Relation of German SMEs. European Journal of Business Science and Technology, 4(1), 5-30. doi: 10.11118/ejobsat.v4i1.130
Share...
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. Ahonen, G. 2000. Generative and Commercially Brunner, A., Decressin, J., Hardy, D. and Exploitable Assets. In Gröjer, J. E. and Stolowy, H. (eds.). Classification of Intangibles, pp. 206-213. Groupe HEC, Jouy-en Josas.
    2. Allen, F. and Gale, D. 1995. A Welfare Comparison of Intermediaries and Financial Markets in Germany and the US. European Economic Review, 39 (5), 179-209. Go to original source...
    3. Benmelech, E. and Bergman, N. 2009. Collateral Pricing. Journal of Financial Economics, 91 (3), 339-360. Go to original source...
    4. Berger, A. N. and Udell, G. F. 1995. Relationship Lending and Lines of Credit in Small Firm Finance. The Journal of Business, 68 (3), 351-381. ISSN 0021-9398. Go to original source...
    5. Bolton, P. and Scharfstein, D. 1996. Optimal Debt Structure and the Number of Creditors. Journal of Political Economy, 104 (1), 1-25. Go to original source...
    6. Boot, A. W. A. 2000. Relationship Banking: What Do We Know? Journal of Financial Intermediation, 9 (1), 7-25. ISSN 1042-9573. Go to original source...
    7. Boot, A. W. A. and Thakor, A. V. 1994. Moral Hazard and Secured Lending in an Infinitely Repeated Credit Market Game. International Economic Review, 35 (4), 899-920. ISSN 0020-6598. Go to original source...
    8. Brealey, R. A., Myers, S. C. and Allen, F. 2008. Principles of Corporate Finance. McGraw-Hill, New York. Kudela, B. 2004. Germany's Three-pillar Banking System: Cross-Country Perspectives in Europe. Internation Monetary Fund - Occasional Paper 233.
    9. Cecchetti, S. and Kharroubi, E. 2015. Why Does Financial Sector Growth Crowd Out Real Economic Growth? CEPR Disussion Paper Series, No. 10642.
    10. Cole, R. A. 1998. The Importance of Relationships to the Availability of Credit. Journal of Banking & Finance, 22 (6-8), 959-977. ISSN 0378-4266. Go to original source...
    11. Degryse, H. and Ongena, S. 2005. Distance, Lending Relationships, and Competition. The Journal of Finance, 60 (1), 231-266. ISSN 1540-6261. Go to original source...
    12. Detragiache, E., Garella, P. and Guiso, L. 2000. Multiple versus Single Banking Relationships: Theory and Evidence. Journal of Finance, 55 (3), 1133-1161. Go to original source...
    13. Dewatripont, M. and Maskin, E. 1995. Credit and Efficiency in Centralized and Decentralized Economies. Review of Economic Studies, 62 (4), 541-555. Go to original source...
    14. Diamond, D. 1984. Financial Intermediation and Delegated Monitoring. Review of Economic Studies, 51 (3), 314-393. Go to original source...
    15. Diamond, D. and Rajan, R. G. 2001. Liquidity Risk, Liquidity Creation and Financial Fragility: A Theory of Banking. Journal of Political Economy, 109 (2), 287-327. Go to original source...
    16. Elsas, R. 2005. Empirical Determinants of Relationship Lending. Journal of Financial Intermediation, 14, 32-57. Go to original source...
    17. Elsas, R. and Krahnen, J. P. 1998. Is Relationship Lending Special? Evidence from Credit-File Data in Germany. Journal of Banking & Finance, 22 (10-11), 1283-1316. Go to original source...
    18. Fabbri, D. and Menichini, A. 2010. Trade Credit, Collateral Liquidation, and Borrowing Constraints. Journal of Financial Economics, 96 (3), 413-432. Go to original source...
    19. Farinha, L. A. and Santos, J. A. C. 2002. Switching from Single to Multiple Bank Lending Relationships: Determinants and Implications. Journal of Financial Intermediation, 11 (2), 124-151. ISSN 1042-9573. Go to original source...
    20. Göx, R. and Wagenhofer, A. 2009. Optimal Impairment Rules. Journal of Accounting and Economics, 48 (1), 2-16. Go to original source...
    21. Giesecke, K., Longstaff, F., Schaefer, S. and Strebulaev, I. 2012. Macroeconomic Effects of Corporate Default Crises: A Long-Term Perspective. NBER Working Paper Series - Working Paper 17854. Go to original source...
    22. Greenbaum, S. I., Kanatas, G. and Venezia, I. 1989. Equilibrium Loan Pricing under the Bank-Client Relationship. Journal of Banking & Finance, 13 (2), 221-235. ISSN 0378-4266. Go to original source...
    23. Hall, B. H. and Lerner, J. 2010. The Financing of R&D and Innovation. In Hall, B. H. and Rosenberg, N. (eds.). Economics of Innovation, Vol. 1, Chapter 14, pp. 609-639. Go to original source...
    24. Harhoff, D. and Körting, T. 1998. Lending Relationships in Germany - Empirical Evidence from Survey Data. Journal of Banking & Finance, 22 (10-11), 1317-1353. ISSN 0378-4266. Go to original source...
    25. Hart, O. 1995. Firms, Contracts, and Financial Structure. Oxford University Press. Go to original source...
    26. Hoshi, T., Kashyap, A. and Scharfstein, D. 1990. Bank Monitoring and Investment: Evidence from the Changing Structure of Japanese Corporate Banking Relationships. In Hubbard, R. (ed.). Asymmetric Information, Corporate Finance, and Investment, Chapter 4, pp. 105-126. NBER Books. ISBN 0-226-35585-3.
    27. Hoshi, T., Kashyap, A. and Scharfstein, D. 1991. Corporate Structure, Liquidity, and Investment: Evidence from Japanese Industrial Groups. The Quarterly Journal of Economics, 106 (1), 33-60. Go to original source...
    28. Houston, J. and James, C. 1996. Bank Information Monopolies and the Mix of Private and Public Debt Claims. The Journal of Finance, 51, 1863-1889. Go to original source...
    29. Houston, J. and James, C. 2001. Do Relationships Have Limits? Banking Relationships, Financial Constraints, and Investment. Journal of Business, 73 (3), 347-374. Go to original source...
    30. Kysucky, V. and Norden, L. 2016. The Benefits of Relationship Lending in a Cross-Country Context: A Meta-Analysis. Management Science, 62 (1), 90-10. Go to original source...
    31. Leuven, E. and Sianesi, B. 2003. PSMATCH2: Stata Module to Perform Full Mahalanobis and Propensity Score Matching, Common Support Graphing, and Covariate Imbalance Testing [online]. Available at: http://ideas.repec.org/c/boc/bocode/s432001.html. [Accessed 2015, January 14].
    32. Lim, S. T., Macias, A. J. and Moeller, T. 2016. Intangible Assets and Capital Structure. Working paper.
    33. Mayer, C., Mankiw, G. and Barroux, Y. 1988. New Issues in Corporate Finance. European Economic Review, 32 (5), 1167-1189. Go to original source...
    34. Modigliani, F. and Miller, M. 1963. Corporate Income Taxes and the Cost of Capital: A Correction. American Economic Review, 53 (3), 433-443.
    35. Myers, S. C. and Majluf, N. S. 1984. Corporate Financing and Investment Decisions when Firms Have Information that Investors Do Not Have. Journal of Financial Economics, 13 (2), 187-221. Go to original source...
    36. Ogawa, K., Sterken, E. and Tokutsu, I. 2007. Why Do Japanese Firms Prefer Multiple Bank Relationship? Some Evidence from Firm-Level Data. Economic Systems, 31 (1), 49-70. Go to original source...
    37. Ongena, S. and Smith, D. 2000. What Determines the Number of Bank Relationships? Cross-Country Evidence. Journal of Financial Intermediation, 9 (1), 26-56. Go to original source...
    38. Peek, J. and Rosengren, S. 1998. The International Transmission of Financial Shocks: The Case of Japan. American Economic Review, 87 (4), 495-505.
    39. Petersen, M. A. and Rajan, R. G. 1994. The Benefits of Lending Relationships: Evidence from Small Business Data. The Journal of Finance, 49 (1), 3-37. ISSN 0022-1082. Go to original source...
    40. Petersen, M. A. and Rajan, R. G. 1995. The Effect of Credit Market Competition on Lending Relationships. The Quarterly Journal of Economics, 110 (2), 407-443. ISSN 0033-5533. Go to original source...
    41. Petty, R. and Guthrie, J. 2000. Intellectual Capital Literature Review: Measurement, Reporting and Management. Journal of Intellectual Capital, 1 (2), 155-176. ISSN 1469-1930. Go to original source...
    42. Rajan, R. G. 1992. Insiders and Outsiders: The Choice between Informed and Arm's-Length Debt. Journal of Finance, 47 (4), 1367-1400. Go to original source...
    43. Rajan, R. G. and Zingales, L. 2001. Financial Systems, Industrial Structure, and Growth. Oxford Review of Economic Policy, 17 (4), 467-482. Go to original source...
    44. Rosenbaum, P. R. and Rubin, D. B. 1983. The Central Role of the Propensity Score in Observational Studies for Causal Effects. Biometrika, 70 (1), 41-55. Go to original source...
    45. Rosenbaum, P. R. and Rubin, D. B. 1985. Constructing a Control Group Using Multivariate Matched Sampling Methods that Incorporate the Propensity Score. The American Statistician, 39 (1), 33-38. Go to original source...
    46. Schenone, C. 2010. Lending Relationships and Information Rents: Do Banks Exploit Their Information Advantages? Review of Financial Studies, 23 (3), 1149-1199. Go to original source...
    47. Sharma, N. 2012. Intangible Assets: A Study of Valuation Methods. BVIMR Management Edge, 5 (1), 61-69.
    48. Sharpe, S. A. 1990. Asymmetric Information, Bank Lending and Implicit Contracts: A Stylized Model of Customer Relationships. The Journal of Finance, 45 (4), 1069-1087. ISSN 0022-1082. Go to original source...
    49. Stuart, E. A. 2010. Matching Methods for Causal Inference: A Review and a Look Forward. Statistical Science : A Review Journal of the Institute of Mathematical Statistics, 25 (1), 1-21. Go to original source...
    50. Sveiby, K. 1997. The New Organizational Wealth: Managing and Measuring Knowledge Based Assets. Barrett-Kohler, Publishers, San Francisco.
    51. Thadden, E.-L. von. 1995. Long-Term Contracts, Short-Term Investment and Monitoring. The Review of Economic Studies, 62 (4), 557-575. ISSN 0034-6527. Go to original source...
    52. Yosha, O. 1995. Information Disclosure Costs and the Choice of Financing Source. Journal of Financial Intermediation, 4 (1), 3-20. Go to original source...

    This is an open access article distributed under the terms of the Creative Commons Attribution-ShareAlike 4.0 International License (CC BY-SA 4.0), which permits use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content