that the bank continues inefficient projects, i.e., zombie lending occurs. In the short run - for a given contract - a drop …

finds that heightened uncertainty is accompanied by an increase in corporate bond yields and a decrease in bank lending … the value of the lending relationship and lowers the lending rate. Bond investors demand compensation for the increased …

Using a novel way to identify relationship and transaction banks, we study how banks' lending techniques affect funding … to SMEs over the business cycle. For 21 countries we link the lending techniques that banks use in the direct vicinity of … firms to these firms' credit constraints at two contrasting points of the business cycle. We show that relationship lending …