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Corporate choice of banks: Decision factors, decision maker, and decision process -- First evidence

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Author Info

  • Ongena, Steven
  • Tümer-Alkan, Günseli
  • Vermeer, Bram

Abstract

In this paper, we investigate how firms choose their banks. We focus on the role played by the decision factors, the decision maker and the decision process in determining firm-bank relationships. We have access to a unique survey that was run by a major bank in the Czech Republic. We find that firms that consider bank reputation to be an important decision factor, have fewer bank relationships and are less likely to reduce the number or quantity of services taken from their banks. Firms that emphasize the price of bank services are more likely to end relationships or to reduce services. Interestingly, the identity of the corporate decision maker determines the number of bank relationships. A Chief Financial Officer deciding on her own will opt for a lower number of banks than a committee of board members.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Corporate Finance.

Volume (Year): 17 (2011)
Issue (Month): 2 (April)
Pages: 326-351

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Handle: RePEc:eee:corfin:v:17:y:2011:i:2:p:326-351

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Web page: http://www.elsevier.com/locate/jcorpfin

Related research

Keywords: Firm-bank relationships Switching Decision-making;

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Cited by:
  1. Rosenfeld, Claire M., 2014. "The effect of banking relationships on the future of financially distressed firms," Journal of Corporate Finance, Elsevier, vol. 25(C), pages 403-418.
  2. Schlüter, Tobias & Sievers, Sönke & Hartmann-Wendels, Thomas, 2012. "How can banks effectively stabilize their retail customers saving behavior? The impact of contractual rewards on saving persistence and cash flow volatility," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62057, Verein für Socialpolitik / German Economic Association.

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