Bank Relationships and Firm Profitability

Hans Degryse and Steven Ongena

Financial Management, 2001, vol. 30, issue 1

Abstract: This paper examines how bank relationships affect firm performance. An empirical implication of recent theoretical models is that firms maintaining multiple bank relationships are less profitable than their single-bank peers. We investigate this empirical implication using a data set containing virtually all Norwegian publicly listed firms for the period 1979-1995. We find a robust and economically relevant negative two-way correspondence between the number of relationships and sales profitability. We also find that firms replacing a single relationship are on average smaller and younger than those firms choosing not to replace a single relationship.

Date: 2001
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Working Paper: Bank Relationship and Firm Profitability (2000)
Working Paper: Bank Relationship and Firm Profitability (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:fma:fmanag:degryse01

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