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dc.contributor.authorLaux, Christianen_US
dc.contributor.authorWalz, Uween_US
dc.date.accessioned2007-04-20en_US
dc.date.accessioned2009-07-24T13:48:05Z-
dc.date.available2009-07-24T13:48:05Z-
dc.date.issued2006en_US
dc.identifier.piurn:nbn:de:hebis:30-38017-
dc.identifier.urihttp://hdl.handle.net/10419/25493-
dc.description.abstractInformational economies of scope between lending and underwriting are a mixed blessing for universal banks. While they can reduce the cost of raising capital for a firm, they also reduce incentives in the underwriting business. We show that tying lending and underwriting helps to overcome this dilemma. First, risky debt in tied deals works as a bond to increase underwriting incentives. Second, with limitations on contracting, tying reduces the underwriting rents as the additional incentives from debt can substitute for monetary incentives. In addition, reducing the yield on the tied debt is a means to pay for the rent in the underwriting business and to transfer informational benefits to the client. Thus, tying is a double edged sword for universal banks. It helps to compete against specialized investment banks, but it can reduce the rent to be earned in investment banking when universal banks compete against each other. We derive several empirical predictions regarding the characteristics of tied deals.en_US
dc.language.isoengen_US
dc.publisherCenter for Financial Studies Frankfurt, Mainen_US
dc.relation.ispartofseriesCFS Working Paper 2006/27en_US
dc.subject.jelG21en_US
dc.subject.jelG24en_US
dc.subject.jelD49en_US
dc.subject.ddc330en_US
dc.subject.keywordTyingen_US
dc.subject.keywordInvestment Bankingen_US
dc.subject.keywordUniversal Bankingen_US
dc.titleTying lending and underwriting: Scope economies, incentives, and reputationen_US
dc.typeWorking Paperen_US
dc.identifier.ppn527429171en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungen-
dc.identifier.repecRePEc:zbw:cfswop:200627-
Appears in Collections:CFS Working Paper Series, Universität Frankfurt a. M.

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