Working Capital Management and Bank Mergers

Baoqi Na and Katsutoshi Shimizu ()
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Baoqi Na: Graduate School of Economics, Nagoya University, Furo-cho, Chikusa-ku, Nagoya 464-8601, Aichi, Japan
Katsutoshi Shimizu: Department of Economics, Nagoya University, Furo-cho, Chikusa-ku, Nagoya 464-8601, Aichi, Japan

JRFM, 2024, vol. 17, issue 5, 1-23

Abstract: This study investigates the consequences of bank mergers on non-financial borrowers’ working capital management. We find evidence that bank mergers increase corporate cash holdings and decrease receivables and investments in inventories by reducing bank credit availability. Bank mergers also decrease trade credit used through the reduction in bank credit availability. These findings are new contributions to the literature, suggesting that borrowing firms find it more difficult to manage working capital after bank mergers occur and that bank-dependent firms find it more difficult to manage working capital than their non-dependent counterparts after mergers.

Keywords: bank merger; working capital; trade credit; cash; bank dependence (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
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