Cross Ownership, Loan Commitment, Managerial Delegation and the “Prisoner’s Dilemma”

Jie Ma, Leonard F.S. Wang and Ji Sun

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the relationship between cross ownership, sales delegation and loan commitment. We find that under sales delegation, a higher degree of cross ownership decreases the optimal bank loan interest rate, which is beneficial to the firm profits. However, cross ownership reduces the firm output, leading a lower consumer surplus and social welfare. The policy implication is that antitrust authority and banking regulatory bureau should “coordinate” policies to mitigate the concerned stakeholders’ conflicts.

Keywords: Cross ownership; Sales delegation; Loan commitment (search for similar items in EconPapers)
JEL-codes: G32 G34 J53 L21 (search for similar items in EconPapers)
Date: 2022-07-25, Revised 2022-11-02
New Economics Papers: this item is included in nep-cfn
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