Estimation the Effect of Lending Relationships Impact on Lending Transaction Costs: Case Study of Iranian Banks’ Branches Located in Tehran

Document Type : Research Paper

Authors

1 Associate Prof. in Management, Faculty of Management, Ilam University, Ilam, Iran

2 Prof. in Management, Faculty of Management, Tehran University, Tehran, Iran

3 Ph.D. Candidate in Financial Economics, Allame Tabatabai University, Tehran, Iran

Abstract

This study in first stage, describes the transaction costs imposed on credit institutions‌ and the factors affecting them from the traditional model of transaction cost economics and also introduced the "relationship lending" as a variable that points to reduce the information asymmetry between the borrower and the credit institute. The impact of this variable using Ordered Multinomial Probit Model on the Williamson model will be examined. Credit institutes under this study have been collected as a random sample from banks in Tehran .These banks had been authorized by central bank of Iran till March 2012. The results shows that with the introduction of the independent variable "lending relationships" the final effect of the independent variables "investment in specific assets", "special collaterals", "degree of uncertainty for the credit institute" and "difficulty in measuring employee performance" on variable of transaction costs of lending will be reduced.

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Financial Research Journal
Volume 18, Issue 3
March 2016
Pages 563-589

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