The aim of the project is to analyse the frequently asserted claim that the German banking system is superior to the American banking system with regard to the provision of outside capital to small and medium-sized enterprises (SMEs). To this end, we will review hypotheses which attribute differences between Germany and the United States with respect to lending practices towards SMEs to country-specific institutional differences between the banking systems. Two cross-sectional data records from company surveys in Germany and the USA will be used for this microeconometric investigation. The first project phase will deal with a review of theoretical and empirical research conducted thus far on the subject matters credit financing and company-bank relations. We will then determine the regulatory and institutional differences between the banking systems in Germany and the United States. In the second project phase we will formulate hypotheses drawn from literature on corporate financing, that concentrate on the prominent role that the savings and cooperative bank sector in Germany assumes in the financing of SMEs, in contrast to the United States. Following are examples for such hypotheses: The savings and cooperative bank sector in Germany accounts for a distinctly higher share in credit financing of SMEs than in the USA. Compared to American SMEs, German SMEs have longer and closer relationships to their banks. In Germany, intensive competition among banks favours the establishment of long and close bank relations of SMEs, which improves the availability of loans. German SMEs finance themselves more frequently with long-term fixed-rate loans than SMEs in the USA. In the comparative, empirical analysis of the third project phase we will review the hypotheses with micro-econometric methods on the basis of both cross-sectional data sets.

Project duration

01.01.1999 - 31.12.2001


Timm Körting

Project members

Prof. Dr. Dietmar Harhoff, Ph.D. (Coordinator)
Timm Körting