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http://hdl.handle.net/10419/23413
  
Title:Heterogeneous Multiple Bank Financing, Optimal Business Risk and Information Disclosure PDF Logo
Authors:Bannier, Christina E.
Issue Date:2005
Series/Report no.:Working paper series / Johann-Wolfgang-Goethe-Universität Frankfurt am Main, Fachbereich Wirtschaftswissenschaften : Finance & Accounting 148
Abstract:This paper studies optimal risk-taking and information disclosure by firms that obtain financing from both a ?relationship? bank and ?arm?s-length? banks. We find that firm decisions are asymmetrically influenced by the degree of heterogeneity among banks: lowly-collateralized firms vary optimal risk and information precision along with the degree of relationship lending for projects with low expected cash-flows, while highly-collateralized firms do so for projects with high expected cash-flows. Incidences of inefficient project liquidation are minimized if the former firms rely on relationship banking to a low degree, the latter to a large degree.
Subjects:Risk
Relationship Lending
Asymmetric Information
Liquidity Crisis
Efficiency
JEL:D82
L14
G21
Document Type:Working Paper
Appears in Collections:Working Paper Series: Finance and Accounting, Universität Frankfurt a. M.

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