 Connected lending and concentrated controlJournal of Financial Stability, 2013, vol. 9, issue 4, 475-486 Abstract: Banks’ controlling owners may exploit business relationships with other firms so as to tangibly or intangibly benefit themselves. This paper uses data from more than 2600 firms across 25 countries to study whether the control rights of the banks’ controlling owners are associated with whether firms need special connections with banks in order to obtain loans. I find that the control rights of the controlling owners increase the need for special connections. I also find that supervisory power raises the need for special connections and intensifies the adverse effect induced by concentrated control. No evidence is found that shareholder rights protection reduces the need for special connections, nor that bank officials become less corrupted as the control rights of the controlling owners increase. The results thus indicate that an increase in the control rights of the banks’ controlling owners only reduces the integrity of bank lending. Keywords: Firm financing; Financial institutions; Bank governance (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:9:y:2013:i:4:p:475-486 DOI: 10.1016/j.jfs.2013.07.005 Access Statistics for this article Journal of Financial Stability is currently edited by I. Hasan, W. C. Hunter and G. G. Kaufman More articles in Journal of Financial Stability from Elsevier |
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