Industry ownership of banks and credit market competition

Michael Tröge

No FS IV 97-36, Discussion Papers, Research Unit: Market Dynamics from WZB Berlin Social Science Center

Abstract: This paper analyzes the effect of bank participation in the equity of a firm on the competitiveness of the credit market. Using an auction model of bank competition it is shown that an equity stake of one bank is increasing its market power in the market for credits to this firms. The share-owning bank provides credit more often, its profit and the average interest rate increases. If several banks own symmetric stakes, the interest rate decreases. However, if one bank owns an equity stake, no other bank has incentives to own equity of this firm.

Date: 1997
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/51165/1/250473186.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:zbw:wzbmdy:fsiv9736

Access Statistics for this paper

More papers in Discussion Papers, Research Unit: Market Dynamics from WZB Berlin Social Science Center Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().