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The Benefits of Concurrent Bank Lending and Investing via Bank-affiliated Venture Capital

Masaru Konishi, 大 小西 and Katsushi Suzuki

Hitotsubashi Journal of commerce and management, 2007, vol. 41, issue 1, 19-36

Abstract: Using Japanese IPOs, this paper empirically examines the roles that bank-affiliated venture capital firms play in mitigating information asymmetries that are detrimental in small business lending. We find that concurrent bank lending and investing via venture capital subsidiaries benefits firms by increasing credit availability, particularly by increasing the availability of long-term loans, but not by lowering interest rates. We also find that banks that jointly deliver lending and investment via VC subsidiaries build close ties with firms. These results suggest that strong bank-firm relationships, which benefit firms by availability of credit, can be built through scope of relationships.

Keywords: Venture capital; Capital structure; Relationship lending; Japanese finance (search for similar items in EconPapers)
JEL-codes: G21 G24 G32 G34 (search for similar items in EconPapers)
Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitjcm:v:41:y:2007:i:1:p:19-36

DOI: 10.15057/14620

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