Bank Ownership Type and Banking Relationships

37 Pages Posted: 20 Apr 2016

See all articles by Allen N. Berger

Allen N. Berger

University of South Carolina - Darla Moore School of Business; Wharton Financial Institutions Center; European Banking Center

Leora F. Klapper

World Bank; World Bank - Development Research Group (DECRG)

Maria Soledad Martinez Peria

International Monetary Fund (IMF)

Rida Zaidi

Fitch Ratings Inc.

Date Written: March 1, 2006

Abstract

We formulate and test hypotheses about the role of bank ownership type - foreign, state-owned, and private domestic banks - in banking relationships. Our application uses data from India, an important developing nation. The empirical results are consistent with all of our hypotheses with regard to foreign banks. First, these banks tend to establish relationships with relatively transparent firms. Second, firms that have relationships with foreign banks are more likely to enter into multiple banking relationships and to maintain a larger number of such relationships. Finally, firms banking with foreign banks are more likely than others to diversify relationships across bank ownership types. The data are also consistent with the hypotheses that firms with relationships with state-owned banks are relatively unlikely to maintain multiple banking relationships, tend to interact with a smaller number of banks, and less often diversify across ownership types.

Keywords: Banks & Banking Reform, Financial Intermediation, Financial Crisis Management & Restructuring, Banking Law, Economic Theory & Research

Suggested Citation

Berger, Allen N. and Klapper, Leora F. and Martinez Peria, Maria Soledad and Zaidi, Rida, Bank Ownership Type and Banking Relationships (March 1, 2006). World Bank Policy Research Working Paper No. 3862. Available at SSRN: https://ssrn.com/abstract=922988

Allen N. Berger

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States
803-576-8440 (Phone)
803-777-6876 (Fax)

Wharton Financial Institutions Center

Philadelphia, PA 19104-6367
United States

European Banking Center

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Leora F. Klapper

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States
202-473-8738 (Phone)

HOME PAGE: http://econ.worldbank.org/staff/lklapper

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Maria Soledad Martinez Peria (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Rida Zaidi

Fitch Ratings Inc. ( email )

One state street plaza
New York, NY 10004
United States

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