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Title:Is there a hold-up benefit in heterogeneous multiple bank financing? PDF Logo
Authors:Bannier, Christina E.
Issue Date:2009
Series/Report no.:Working paper series // Frankfurt School of Finance & Management 117
Abstract:This paper studies the effects that heterogeneous multiple bank financing has on a firm's risk- and information-policy, particularly with respect to credit renegotiation efficiency. We find that a significant, yet limited, degree of relationship lending enables firms with high asset specificity to credibly signal their desire to abstain from strategic default. This allows the firm's policy to eliminate the risk of inefficient liquidation even in the case of bleak cash-flow expectations. This hold-up benefit comes at a cost, though: firms with low asset specificity cannot always eliminate the risk of coordination failure by their banks.
JEL:D82
G21
L14
Persistent Identifier of the first edition:urn:nbn:de:101:1-2009042200
Document Type:Working Paper
Appears in Collections:Frankfurt School - Working Paper Series, Frankfurt School of Finance and Management

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