DISRUPTED LENDING RELATIONSHIP AND
BORROWER'S STRATEGIC DEFAULT: EVIDENCE FROM THE TOURISM INDUSTRY DURING THE
GREEK ECONOMIC CRISIS
Panagiotis Avramidis
Alba Graduate Business School, The
American College of Greece
Ioannis Asimakopoulos
Bank of Greece
Dimitris Malliaropulos
Bank of Greece and University of Piraeus
Abstract
Using
a sample of bank loans to firms operating in the tourism industry for the
period 2010-2015, and regional variation of tourism activities to identify the
strategic defaulted firms, we examine the impact of Greek banks consolidation on
the firms’ payment behavior. We show that a merger-induced impairment of the
lending relationship is related to a higher likelihood of strategic default by
the target bank’s borrowers. In contrast, mergers with a limited impact on the
lending relationship have no effect on the probability of strategic default of target
bank’s borrowers. The results highlight the importance of relationship lending
benefits in strategic default decisions. Our findings are robust to the
alternative interpretation of soft budget constraints.
JEL-classification: G21, G32, G33
Keywords: Bank consolidation, strategic default, lending
relationship.
Acknowledgements: We want to thank
Nikos Artavanis and Antonis Kotidis for helpful suggestions and comments. The
views expressed in this paper are those of the authors and not necessarily
those of the Bank of Greece, the ECB or the Eurosystem.
Correspondence:
Dimitris Malliaropulos
Economic Analysis and
Research Department, Bank of Greece,
21 El. Venizelos Av.,
10250
Athens, Greece
Tel.:0030-210-3202380
Fax: 0030-210-3203939
Email: dmalliaropulos@bankofgreece.gr