What Determines the Number of Bank Relationships? Cross-Country Evidence

Posted: 28 Mar 2000

See all articles by David C. Smith

David C. Smith

University of Virginia - McIntire School of Commerce

Steven Ongena

University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; Centre for Economic Policy Research (CEPR)

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Abstract

We investigate the determinants of multiple-bank relationships using a new data set comprised of 1079 firms across twenty European countries. We document large cross-country variation in the average number of bank relationships per firm, uncovering a richness in European financial systems that extends beyond the standard description of being "bank-dominated." After controlling for a variety of firm-specific characteristics, we find that firms maintain more bank relationships, on average, in countries with inefficient judicial systems and poor enforcement of creditor rights. Firms also maintain more relationships in countries with unconcentrated, but stable, banking systems and active public bond markets.

JEL Classification: G21, C41

Suggested Citation

Smith, David Carl and Ongena, Steven R. G., What Determines the Number of Bank Relationships? Cross-Country Evidence. Journal of Financial Intermediation, Vol. 9, No. 1. Available at SSRN: https://ssrn.com/abstract=212011

David Carl Smith (Contact Author)

University of Virginia - McIntire School of Commerce ( email )

P.O. Box 400173
Charlottesville, VA 22904-4173
United States

Steven R. G. Ongena

University of Zurich - Department of Banking and Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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