Agency Cost of Debt and Lending Market Competition: Is there a Relationship?

Erkki Koskela and Rune Stenbacka

No 274, CESifo Working Paper Series from CESifo

Abstract: We address the question of how lending market competition, measured by the bargaining power of banks, affects the agency costs of debt finance. It is shown that intensified lending market competition will lead to lower lending rates and investment return distributions which are shifted towards lower, but less risky returns. Consequently, it follows that increased lending market competition will reduce the agency cost of debt financing. Hence, our analysis does not lend support to the commonly held view that there would be a trade-off between more intensive lending market competition and higher agency costs of debt finance.

Keywords: Bank competition; agency cost of debt (search for similar items in EconPapers)
Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo_wp274.pdf (application/pdf)

Related works:
Working Paper: Agency cost of debt and lending market competition: Is there a relationship? (2000)
Working Paper: Agency Cost Debt and Lending Market Competition: Is there a Relationship? (1999)
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:ces:ceswps:_274

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().