Heterogeneous multiple bank financing, optimal business risk and information disclosure

Small and medium-sized firms typically obtain capital via bank financing. They often rely on a mixture of relationship and arm’s-length banking. This paper explores the reasons for the dominance of heterogeneous multiple
Small and medium-sized firms typically obtain capital via bank financing. They often rely on a mixture of relationship and arm’s-length banking. This paper explores the reasons for the dominance of heterogeneous multiple banking systems. We show that the incidence of inefficient credit termination and subsequent firm liquidation is contingent on the borrower’s quality and on the relationship bank’s information precision. Generally, heterogeneous multiple banking leads to fewer inefficient credit decisions than monopoly relationship lending or homogeneous multiple banking, provided that the relationship bank’s fraction of total firm debt is not too large. JEL Classification: G21, L14, D82
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Metadaten
Author:Christina E. Bannier
URN:urn:nbn:de:hebis:30-17588
Series (Serial Number):Working paper series / Johann-Wolfgang-Goethe-Universität Frankfurt am Main, Fachbereich Wirtschaftswissenschaften : Finance & Accounting (148)
Document Type:Working Paper
Language:English
Date of Publication (online):2005/10/06
Year of first Publication:2005
Publishing Institution:Univ.-Bibliothek Frankfurt am Main
Release Date:2005/10/06
Tag:Asymmetric Information ; Efficiency; Liquidity Crisis ; Relationship Lending ; Risk
SWD-Keyword:Finanzierungstheorie / Kredit / Bank / Risikomanagement / Investor Relations / Projektfinanzierung / Lieferanten-Kunden-Beziehung / Theorie
Source:Working paper series / Johann-Wolfgang-Goethe-Universität Frankfurt am Main, Fachbereich Wirtschaftswissenschaften : Finance & Accounting ; 148
HeBIS PPN:188878548
Institutes:Wirtschaftswissenschaften
Dewey Decimal Classification:330 Wirtschaft
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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