Abstract

http://ssrn.com/abstract=208268
 
 

References (38)



 
 

Footnotes (34)



 


 



Switching from Single to Multiple Bank Lending Relationships: Determinants and Implications


Maria Luísa Alcoforado Farinha


Bank of Portugal

João A. C. Santos


Federal Reserve Bank of New York

July 2001

BIS Working Paper No. 83

Abstract:     
Our results show that the majority of firms borrow for the first time from a single bank, but soon afterwards some of them start borrowing from several banks. Duration analysis shows that the likelihood of a firm substituting a single with multiple relationships increases with the duration of the single relationship and that firms with more growth opportunities and more bank debt are more likely to initiate multiple relationships. Firms with poor performance, too, are more likely to initiate multiple relationships. The analysis of the ex post effects of the initiation of multiple relationships does not detect an increase in the firm's overall indebtedness and investment, but it finds an increase in its trade credit reliance and no improvement in its performance. Overall these results suggest to us that a potential unwillingness by the incumbent bank to increase its exposure to a firm because of its past poor performance appears to explain better firms' decision to initiate multiple relationships than the hypothesis that they do so to protect themselves against the hold-up rents inherent to exclusive relationships because they have many growth opportunities.

Number of Pages in PDF File: 40

JEL Classification: G21, G32

working papers series


Download This Paper

Date posted: December 13, 2005  

Suggested Citation

Alcoforado Farinha , Maria Luísa and Santos, João A. C., Switching from Single to Multiple Bank Lending Relationships: Determinants and Implications (July 2001). BIS Working Paper No. 83. Available at SSRN: http://ssrn.com/abstract=208268 or http://dx.doi.org/10.2139/ssrn.208268

Contact Information

Maria Luísa Alcoforado Farinha
Bank of Portugal ( email )
Av. Almirante Reis, 71
1150 Lisbon
Portugal
351-21-3128350 (Phone)
João A. C. Santos (Contact Author)
Federal Reserve Bank of New York ( email )
33 Liberty Street
New York, NY 10045
United States
212-720-5583 (Phone)
212-720-8363 (Fax)
HOME PAGE: HTTP://WWW.NEWYORKFED.ORG/RMAGHOME/ECONOMIST/SANTOS/CONTACT.HTML
Feedback to SSRN


Paper statistics
Abstract Views: 2,456
Downloads: 405
Download Rank: 39,551
References:  38
Footnotes:  34

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.234 seconds