Collective relationship banking and private information monitoring in Korea
AbstractThis paper introduces the notion of collective relationship banking (CRB) as a mechanism for monitoring private information and characterizes the probability of such a banking relationship existing when the borrowing firms have heterogeneous vertical ownership structures. Using a Korean firm-level panel dataset, the empirical results of the paper suggest that firms with smaller holding companies' ownership stakes are more likely to choose CRB. This can be explained in terms of CRB as a means to overcome informational asymmetries as holding companies can provide indirect monitoring. The paper then addresses policy concerns associated with corporate restructuring which may create a more concentrated banking relationship with a few dominant banks. Copyright (c) 2007 The Author Journal compilation (c) 2007 The European Bank for Reconstruction and Development. .
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Bibliographic InfoArticle provided by The European Bank for Reconstruction and Development in its journal Economics of Transition.
Volume (Year): 15 (2007)
Issue (Month): (07)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0967-0750
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Other versions of this item:
- Yoonhee Tina Chang, 2005. "Collective Relationship Banking and Private Information Monitoring in Korea," Working Papers 06-2, Centre for Competition Policy, University of East Anglia.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L59 - Industrial Organization - - Regulation and Industrial Policy - - - Other
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