Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/23413 
Year of Publication: 
2005
Series/Report no.: 
Working Paper Series: Finance & Accounting No. 148
Publisher: 
Johann Wolfgang Goethe-Universität Frankfurt am Main, Fachbereich Wirtschaftswissenschaften, Frankfurt a. M.
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

Files in This Item:
File
Size
269.82 kB





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