The Informative Contents of Bank Debt Concentration

27 Pages Posted: 23 Jun 2003

See all articles by Frederic Lobez

Frederic Lobez

University of Lille II - GERME Research Center

Jean-Christophe Statnik

University of Lille II - University of Lille LSMRC & ISA

Abstract

This paper deals with the concentration of corporate bank debt. In an economy with asymmetric information, we show that the bank debt concentration with a main bank possessing informational monopoly is a reliable signal of the firm's quality for the secondary banks. Precisely, the firm's choice of the parts lent by the main bank and the secondary banks allows use of the main bank's market power to signal its quality to the secondary banks. We establish a positive relationship between the amount lent by the main bank and the firm's quality.

JEL Classification: G21, G32

Suggested Citation

Lobez, Frederic and Statnik, Jean-Christophe, The Informative Contents of Bank Debt Concentration. EFMA 2003 Helinksi Meetings. Available at SSRN: https://ssrn.com/abstract=410195 or http://dx.doi.org/10.2139/ssrn.410195

Frederic Lobez (Contact Author)

University of Lille II - GERME Research Center ( email )

1, Place Deliote BP 381
Lille, 59000
France
03 20 99 74 75 (Phone)
03-20-90-77-02 (Fax)

Jean-Christophe Statnik

University of Lille II - University of Lille LSMRC & ISA ( email )

1, rue de Mulhouse
Lille, 59000
France

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