Collective Relationship Banking and Private Information Monitoring in Korea

Yoonhee Chang

No 06-2, Working Papers from Centre for Competition Policy, University of East Anglia

Abstract: The structure of conglomerates embedded in the strong vertical ownership network in East Asia was believed to be a driving force for the economic success but was also blamed for the recent financial crisis in Asia given the fallacy - too big to collapse. This paper introduces a notion of collective relationship banking (CRB) as a mechanism for monitoring private information and investigates the likelihood of such a banking relationship when the borrowing firms have heterogenous vertical ownership structure using a Korean firm level panel dataset. Policy concerns are then addressed since the post-crisis corporate restructuring may create a more concentrated banking relationship with a few dominant banks.

Keywords: Collective relationship banking; vertical ownership; information monitoring; relation-based governance (search for similar items in EconPapers)
JEL-codes: G21 G28 L13 L59 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2005-10
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Related works:
Working Paper: Collective Relationship Banking and Private Information Monitoring in Korea (2006)
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