Information Intermediaries: How Commercial Bankers Facilitate Strategic Alliances

65 Pages Posted: 22 Jun 2018 Last revised: 13 Jul 2019

See all articles by Marc Frattaroli

Marc Frattaroli

Ecole Polytechnique Fédérale de Lausanne; Swiss Finance Institute

Christoph Herpfer

Emory University - Goizueta Business School

Date Written: June 4, 2019

Abstract

We investigate how bankers use information from lending relationships to help borrowers combine resources in strategic alliances. Firms that have borrowed from the same banker or share an indirect connection through a network of bankers are significantly more likely to enter an alliance. Consistent with bankers overcoming informational frictions, their ability to facilitate alliances decreases with network distance, and is stronger for opaque borrowers. Alliances are associated with positive announcement returns and brokering banks are more likely to receive future underwriting mandates. We exploit quasi-exogenous variation in banker networks from interstate branching deregulation to show that this relationship is causal.

Keywords: Banking, Strategic Alliances, Information Transmission

JEL Classification: G20, G21, G30

Suggested Citation

Frattaroli, Marc and Herpfer, Christoph, Information Intermediaries: How Commercial Bankers Facilitate Strategic Alliances (June 4, 2019). Swiss Finance Institute Research Paper No. 18-53; 14th Annual Mid-Atlantic Research Conference in Finance (MARC). Available at SSRN: https://ssrn.com/abstract=3192447 or http://dx.doi.org/10.2139/ssrn.3192447

Marc Frattaroli

Ecole Polytechnique Fédérale de Lausanne ( email )

Switzerland

HOME PAGE: http://www.marcfrattaroli.com

Swiss Finance Institute ( email )

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

Christoph Herpfer (Contact Author)

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

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