This study examines whether trust between savings banks (Sparkassen) and small and mediumsized enterprises (SMEs) influences the cost of credit, collateral requirements, and credit availability. We collected data on historical credit decisions from two savings banks through an on-site inspection of credit files. Measures of trust and credit availability were gathered by means of questionnaires from the responsible relationship managers and credit risk officers. Multivariate OLS and Logit regressions provided evidence that the banks’ trust in the SME negatively influenced interest rates and increased credit availability. In contradiction to our hypothesis, the savings banks’ trust in the SME increased collateralization levels.    «

This study examines whether trust between savings banks (Sparkassen) and small and mediumsized enterprises (SMEs) influences the cost of credit, collateral requirements, and credit availability. We collected data on historical credit decisions from two savings banks through an on-site inspection of credit files. Measures of trust and credit availability were gathered by means of questionnaires from the responsible relationship managers and credit risk officers. Multivariate OLS...    »