Bank competition and firms’ dependence: evidence from firms’ role

Chih-Wei Wang, Chien-Chiang Lee (), Chi Yin and Min-Rui Choo

Applied Economics, 2021, vol. 53, issue 10, 1143-1162

Abstract: This research provides empirical evidence on bank-firm relationships from firms’ role in discussing their dependence on banks from the perspectives of bank competition. Using a rich dataset of loans, we find that firms reduce their dependence on banks when banks operate in a more competitive environment. These effects are more pronounced when firms are financially distressed and constrained. Moreover, firms with active family control exhibit less dependence on lenders in a competitive environment. Our evidence provides specific strategies and self-consideration of borrowers and lenders.

Date: 2021
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DOI: 10.1080/00036846.2020.1827134

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