This project basically consists of two main parts. The first part of the project focuses on the empirical investigation of lending relationships of small and medium enterprises (SMEs). Moreover, an in-depth comparison between Germany and the United States is intended. For this purpose, a survey was conducted among 1,500 German SMEs similar to the surveys undertaken by the U.S. Small Business Administration. The data resulting from the German survey includes comprehensive information on the lending practices towards SMEs in Germany as well as the lending relationships and general characteristics of these firms. The results obtained as of yet suggest that lending relationships are advantageous to German SMEs regarding credit availability and credit conditions. Also, the results show considerable similarities between SMEs in Germany and the USA when compared to previous studies for the USA. In both countries, borrowing of these firms is highly concentrated on a few banks and the quality of lending relationships has greater impact on collateralisation and credit availability than on price conditions. The central objective of the second part of the project is to analyse the nexus between corporate investment and taxation. For this purpose, based on a description of the recent theoretical and empirical literature the effects of firm taxes, rates, and tax base on the investment decision will be discussed. The empirical analysis will provide a comprehensive list of the taxation framework for the investigated periods 1985 to 1999, and furthermore the formulation and development of structural investment models as well as the panel econometric estimation. We intend an integration of the user costs of capital and the taxation regime in existing reduced form models and structural models. For our estimation we use data from the Bundesbank’s statistics on corporate balance sheets and newer panel econometric methods. The estimation result for the elasticity between investment and the user cost of capital is about -0.42. The estimate is in the middle range of previous estimates for the USA. But this measure is conservative, since it does not take tax asymmetries into account.