Is there a Holdup Benefit in Heterogeneous Multiple Bank Financing?

Christina Bannier

Journal of Institutional and Theoretical Economics (JITE), 2010, vol. 166, issue 4, 641-661

Abstract: This paper studies the effects that heterogeneous multiple bank financing has on a firm's risk and information policy when the firm tries to maximize credit renegotiation efficiency. We find that a significant, yet limited, degree of relationship lending enables firms with high asset specificity to credibly signal their desire to abstain from strategic default. This allows the firm's policy to eliminate the risk of inefficient liquidation even for bleak cash-flow expectations. This holdup benefit comes at a cost, though: firms with low asset specificity cannot always eliminate the risk of coordination failure by their banks.

JEL-codes: D82 G21 L14 (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
https://www.mohrsiebeck.com/en/article/is-there-a- ... 28093245610793524875 (text/html)
Fulltext access is included for subscribers to the printed version.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mhr:jinste:urn:sici:0932-4569(201012)166:4_641:itahbi_2.0.tx_2-d

Ordering information: This journal article can be ordered from
Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany

Access Statistics for this article

Journal of Institutional and Theoretical Economics (JITE) is currently edited by Gerd Mühlheußer and Bayer, Ralph-C

More articles in Journal of Institutional and Theoretical Economics (JITE) from Mohr Siebeck, Tübingen
Bibliographic data for series maintained by Thomas Wolpert ().