Christian Gruendl

McKinsey · Finance Accounting and Real Estate (FARE)

In 2001, government guarantees for savings banks in Germany were removed following a lawsuit. We use this natural experiment to examine the effect of government guarantees on bank risk-taking. The results suggest that banks whose government guarantee was removed reduced credit risk by cutting off the riskiest borrowers from credit. Using a differen...

This paper empirically examines the role of soft information in the competitive interaction between relationship and transaction banks. Soft information can be interpreted as a private signal about the quality of a firm that is observable to a relationship bank, but not to a transaction bank. We show that borrowers self-select to relationship banks...

In this paper we analyze whether discretionary lending increases bank risk. We use a panel dataset of matched bank and borrower data. It offers the chief advantages that we can directly identify soft information in banks’ lending decisions and that we observe ex post defaults of borrowers. Consistent with the previous financial intermediation liter...

In this paper we analyze whether discretionary lending is efficient. We use a panel dataset of matched bank and borrower data. The main advantage of the dataset is that we can uniquely identify the extent to which banks use discretion in their lending decision. We find that smaller banks use more discretion in lending. Borrowers with riskier financ...