Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/209880 
Year of Publication: 
2007
Series/Report no.: 
Working Paper No. 2007/4
Publisher: 
Norges Bank, Oslo
Abstract: 
We derive empirical implications from a stylized theoretical model of bankborrower relationships. Banks' interest rate markups are predicted to follow a life-cycle pattern over the borrowing firms' age. Due to endogenous bank monitoring by competing banks, borrowing firms initially face a low markup, thereafter an increasing markup due to informatonal lock-in until it falls for older firms when lock-in is resolved. By applying a large sample of small unlisted firms and a new measure of asymmetric information, we find that firms with significant asymmetric information problems have a more pronounced life-cycle pattern of interest rate markups. Additionally, we examine the effects of concentrated banking markets on interest markups. Results indicate that markups are mainly driven by asymmetric information problems and not by concentration. However, we find weak evidence that bank market concentration matters for old firms.
JEL: 
G21
L15
Persistent Identifier of the first edition: 
ISBN: 
978-82-7553-391-1
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper
Appears in Collections:

Files in This Item:
File
Size





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