The bank–firm relationship during economic transition: The impacts on bank performance in emerging economies

Mamoru Nagano ()

Emerging Markets Review, 2016, vol. 28, issue C, 117-139

Abstract: We analyze the lending relationships between 1011 banks and 17,284 client borrowers across 11 emerging economies. We first demonstrate that a state-owned bank's risk appetite increases as its number of family business group-owned borrowing partners increases. Second, we show that a non-financial firm-owned bank's risk appetite also increases as its number of family business group-owned borrowing partners increases. Finally, we show that a bank is more likely to reduce its risk appetite and improve its operational cost efficiency as its foreign ownership ratio increases, regardless of the bank's lending partner. These findings suggest that, in the post-privatization period, the ownership structure changes of banks and/or borrowers affect the lending relationship and the bank's risk appetite and cost efficiency.

Keywords: Lending relationship; Emerging market; Soft budget constraint; Ownership structure; Financial risk (search for similar items in EconPapers)
JEL-codes: G21 G31 G32 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:28:y:2016:i:c:p:117-139

DOI: 10.1016/j.ememar.2016.08.005

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