Relationship lending is conventionally interpreted as a strong partnership between a lender and a borrower. Nevertheless, we still lack consensus regarding how to quantify  a lending relationship  while simple statistics such as the frequency and volume of loans have been frequently used . Here, we propose the concept of a significant tie to statistically evaluate the strength of a relationship . Application of the proposed method to the Italian interbank networks reveals that the percentage of relationship lending among all bilateral trades is consistently around 20\%-30\% and that their trading properties are distinct from those of transactional trades .
Relationship lending is broadly interpreted as a strong partnership between a lender and a borrower. Nevertheless, we still lack consensus regarding how to quantify the strength of a lending relationship , while simple statistics such as the frequency and volume of loans have been used as proxies in previous studies . Here, we propose statistical tests to identify relationship lending as a significant tie between banks . Application of the proposed method to the Italian interbank networks reveals that the fraction of relationship lending among all bilateral trades has been quite stable and that the relationship lenders tend to impose high interest rates at the time of financial distress .
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conventionally
broadly
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the strength of
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,
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frequently used
used as proxies in previous studies
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the concept of
statistical tests to identify relationship lending as
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to statistically evaluate the strength of a relationship
between banks
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percentage
fraction
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is consistently around 20\%-30\% and that their trading properties are distinct from those of transactional trades
has been quite stable and that the relationship lenders tend to impose high interest rates at the time of financial distress