Information Verifiability, Bank Organization, Bank Competition and Bank-Borrower Relationships
Masaji Kano,
Hirofumi Uchida,
Gregory Udell (gudell@indiana.edu) and
Wako Watanabe (wakow@fbc.keio.ac.jp)
Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)
Abstract:
This paper investigates whether the benefits of bank-borrower relationships differ depending on three factors identified in the theoretical literature: verifiability of information, bank size and complexity, and bank competition. We extend the current literature by analyzing how relationship lending affects loan contract terms and credit availability in an empirical model that simultaneously accounts for all three of these factors. Also, our unique data set of Japanese SMEs allows us to examine for the first time using micro firm data the value of information verifiability in the form of audited financial statements in setting loan contract terms. We find that firms benefit most from bank-borrower relationships when they do not have audited financial statements and when they borrow from small banks in less competitive markets, which is consistent with a number of different theoretical studies.
Pages: 33 pages
Date: 2006-01
References: Add references at CitEc
Citations: View citations in EconPapers (26)
Downloads: (external link)
https://www.rieti.go.jp/jp/publications/dp/06e003.pdf (application/pdf)
Related works:
Journal Article: Information verifiability, bank organization, bank competition and bank-borrower relationships (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:06003
Access Statistics for this paper
More papers in Discussion papers from Research Institute of Economy, Trade and Industry (RIETI) Contact information at EDIRC.
Bibliographic data for series maintained by TANIMOTO, Toko (tanimoto-toko@rieti.go.jp).