Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46275
Authors: 
Strieborny, Martin
Kukenova, Madina
Year of Publication: 
2011
Series/Report no.: 
CESifo working paper: Fiscal Policy, Macroeconomics and Growth 3349
Abstract: 
Existing literature sees opportunistic behaviour of contractual partners as the main reason why rational agents underinvest in relationship-specific assets. We look beyond this well-know holdup problem and argue that financial vulnerability and short-term planning horizon can also lead to such underinvestment. Subsequently, banks can stimulate growth-enhancing investment in relationship-specific assets by signalling creditworthiness and long-term planning horizon of their borrowers. We empirically confirm this hypothesis by showing that industries dependent on relationship-specific investment from their suppliers grow disproportionately faster in countries with a strong banking sector.
Subjects: 
financial development
relationship-specific investment
growth
JEL: 
G21
O16
O40
Document Type: 
Working Paper

Files in This Item:
File
Size
215.55 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.