Do Bank Relationships Affect the Firm's Underwriter Choice in the Corporate-Bond Underwriting Market?

57 Pages Posted: 4 Aug 2004

See all articles by Ayako Yasuda

Ayako Yasuda

University of California, Davis - Graduate School of Management

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This paper studies the effect of bank relationships on underwriter choice in the U.S. corporate-bond underwriting market following the 1989 commercial-bank entry. I find that bank relationships have positive and significant effects on a firm's underwriter choice, over and above their effects on fees. This result is sharply stronger for junk-bond issuers and first-time issuers. I also find that there is a significant fee discount when there are relationships between firms and commercial banks. Finally, I find that serving as arranger of past loan transactions has the strongest effect on underwriter choice, whereas serving merely as participant has no effect.

Keywords: Investment Banking, Universal Banking, Bank Relationships, Underwriting Market, Bank Competition

JEL Classification: G21, G24, G28, G10, G30, L11, L13, L14, L50, L89

Suggested Citation

Yasuda, Ayako, Do Bank-Firm Relationships Affect Bank Competition in the Corporate Bond Underwriting Market?. Available at SSRN: or

Ayako Yasuda (Contact Author)

University of California, Davis - Graduate School of Management ( email )

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