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dc.contributor.authorLaux, Christianen
dc.contributor.authorWalz, Uween
dc.date.accessioned2007-04-20-
dc.date.accessioned2009-07-24T13:48:05Z-
dc.date.available2009-07-24T13:48:05Z-
dc.date.issued2006-
dc.identifier.piurn:nbn:de:hebis:30-38017en
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
dc.language.isoengen
dc.publisher|aGoethe University Frankfurt, Center for Financial Studies (CFS) |cFrankfurt a. M.en
dc.relation.ispartofseries|aCFS Working Paper |x2006/27en
dc.subject.jelG21en
dc.subject.jelG24en
dc.subject.jelD49en
dc.subject.ddc330en
dc.subject.keywordTyingen
dc.subject.keywordInvestment Bankingen
dc.subject.keywordUniversal Bankingen
dc.titleTying lending and underwriting: Scope economies, incentives, and reputation-
dc.typeWorking Paperen
dc.identifier.ppn527429171en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen
dc.identifier.repecRePEc:zbw:cfswop:200627en

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