Universal Banking, Conflicts of Interest and Firm Growth

Lili Xie ()
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Lili Xie: Department of Economics, Ball State University

No 200703, Working Papers from Ball State University, Department of Economics

Abstract: This paper studies the relationship between universal banking and firm performance. With 40 developing and developed countries, I find that the overall effect of universal banking on firm growth is negative. This suggests that the negative effect of conflicts of interest dominates the positive effect of economies of scale and scope in universal banking. However, in countries with stronger protection of creditors' rights and higher information effciency, conflicts of interest are less likely and the negative relationship between universal banking and firm growth is significantly weaker.

Keywords: Universal Banking; Firm Incentive; Con°icts of Interest; Economies of Scope; Economies of Scale. (search for similar items in EconPapers)
JEL-codes: G21 O16 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2007-07, Revised 2007-07
New Economics Papers: this item is included in nep-ban and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Forthcoming in Journal of Financial Services Research

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http://econfac.bsu.edu/research/workingpapers/bsuecwp200703xie.pdf First version, 2007 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:bsu:wpaper:200703

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