Economics, Econometrics and Finance
4 years ago

Higher collateral leads to increased recovery rates for German companies

Journal of Banking & Finance
Recovery rates of commercial lending: Empirical evidence for German companies
Jens Grunert, Martin Weber

Paper Summary

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The recovery rates of bank loans for German companies were studied. The researchers looked at how collateral, borrower's risk premium, company size, and client relationship affect recovery rates. They found that higher collateral leads to higher recovery rates, while riskier borrowers and larger companies have lower recovery rates. Companies with strong relationships with their banks have higher recovery rates.