Better borrowers, fewer banks?

Christophe Godlewski, Frédéric Lobez () and Jean-Christophe Statnik ()
Additional contact information
Frédéric Lobez: European Center for Corporate Control Studies, Université de Lille Nord de France
Jean-Christophe Statnik: European Center for Corporate Control Studies, Université de Lille Nord de France

Working Papers of LaRGE Research Center from Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg

Abstract: We investigate the relationship between borrower quality and the structure of the pool of banks. First, we develop a theoretical model where the size of the banking pool is a credible signal of firm quality. We argue that better borrowers seek to disclose their quality in a credible way through the structure of the banking pool involving fewer banks. Second, we test our prediction using a sample of more than 3,000 loans from 19 European countries. We perform regressions of the number of bank lenders on various proxies of borrower quality. Our empirical tests corroborate the theoretical redictions. The size of the banking pool is a signal of borrower quality. Hence, good quality firms have fewer lenders in their banking pools.

Keywords: Bank lending; borrower quality; multiple banking; number of lenders; signaling; Europe. (search for similar items in EconPapers)
JEL-codes: D82 G21 G32 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-ban and nep-cta
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://ifs.u-strasbg.fr/large/publications/2010/2010-02.pdf (application/pdf)

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:lar:wpaper:2010-02

Access Statistics for this paper

More papers in Working Papers of LaRGE Research Center from Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg Contact information at EDIRC.
Bibliographic data for series maintained by Christophe J. Godlewski ().