Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/27881
Authors: 
Bannier, Christina E.
Year of Publication: 
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: 
Document Type: 
Working Paper

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