This paper suggests a motive for bank mergers that goes beyond alleged and typically unverifiable scale economies: preemtive resolution of banks ́financial distress. Such "distress mergers" can be a significant motivation for mergers because they can foster reorganizations, realize...

This paper provides new insights into the nature of relationship lending by analyzing the role of collateral and itsreal effects with respect to workout activities. We use a unique data set based on credit files of five leading Germanbanks, thus relying on real information used in the process of...

This study examines empirically whether corporate ratings by the credit ratingagency Standard & Poor’s reflect fundamental and publicly observable shocks tothe credit quality of companies. This serves to assess the degree of informationsensitivity of external ratings, and the timeliness of...

We address the question whether the impact of default risk on equity returns dependson the financial system firms operate in. We compare results from asset pricing testsfor the German and the U.S. stock markets, where Germany is the prime-example fora bank-based financial system. We find that a...

Even 50 years after Modigliani/Miller’s irrelevance theorem, the basic question of how firmschoose their capital structure remains unclear. This survey paper aims at summarizing anddiscussing corresponding recent developments in empirical capital structure research, which,in our view, are...

We use panel data from nine countries over the period 1996 to 2003 to test how revenue diversi-fication in conjunction with increasing bank size affects bank value. Using a comprehensive framework for bank performance measurement, we find no evidence for a conglomerate dis-count, unlike studies...

Some of the most widely expressed myths about the German financial system are concerned with the close ties and intensive interaction between banks and firms, often described as Hausbank relationships. Links between banks and firms include direct shareholdings, board representation, and proxy...

Empirical evidence suggests that even those firms presumably most in need of monitoring-intensive financing (young, small, and innovative firms) have a multitude of bank lenders, where one may be special in the sense of relationship lending. However, theory does not tell us a lot about the...

Despite the relevance of credit financing for the profit and risk situation of commercial banks only little empirical evidence on the initial credit decision and monitoring process exists due to the lack of appropriate data on bank debt financing. The present paper provides a systematic overview...

The German financial market is often characterized as a bank-based system with strong bank-customer relationships. The corresponding notion of a housebank is closely related to the theoretical idea of relationship lending. It is the objective of this paper to provide a direct comparison between...