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Dynamics of bank relationships in entrepreneurial finance

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  • Takahashi, Hidenori

Abstract

This study examines the role of commercial bankers in banks' efforts to build relationships with small and young firms. Using Japanese IPO data, this study reveals that banks tend to provide an additional banker to firms with limited financial experts on the board. In addition, the banker's entry as a proxy to establish a lending relationship is more likely to occur before the bank's venture capital (VC) investment. These findings suggest that commercial banks provide bankers to supplement financial expertise in their client's firms and use this relationship to build subsequent VC investment.

Suggested Citation

  • Takahashi, Hidenori, 2015. "Dynamics of bank relationships in entrepreneurial finance," Journal of Corporate Finance, Elsevier, vol. 34(C), pages 23-31.
    • Handle: RePEc:eee:corfin:v:34:y:2015:i:c:p:23-31
    DOI: 10.1016/j.jcorpfin.2015.07.006
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    References listed on IDEAS

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    Cited by:

    1. Randall Morck & Bernard Yeung, 2017. "East Asian Financial and Economic Development," Working Papers id:12112, eSocialSciences.
    2. Pengda Fan & Kazuo Yamada, 2020. "Same bed different dream composition of IPO shares and withdrawal decisions in weak market conditions," Small Business Economics, Springer, vol. 55(4), pages 955-974, December.
    3. Hideaki Sakawa & Naoki Watanabel, 2020. "IPO underpricing and ownership monitoring in Japan," Asian Business & Management, Palgrave Macmillan, vol. 19(4), pages 480-503, September.
    4. Milosevic, Miona, 2018. "Skills or networks? Success and fundraising determinants in a low performing venture capital market," Research Policy, Elsevier, vol. 47(1), pages 49-60.
    5. Vikas Mehrotra & Randall Morck, 2017. "Governance and Stakeholders," NBER Working Papers 23460, National Bureau of Economic Research, Inc.
    6. Khoo, Joye & Durand, Robert B., 2017. "Japanese corporate leverage during the Lost Decades," Pacific-Basin Finance Journal, Elsevier, vol. 46(PA), pages 94-108.
    7. Hideaki Sakawa & Naoki Watanabel, 0. "IPO underpricing and ownership monitoring in Japan," Asian Business & Management, Palgrave Macmillan, vol. 0, pages 1-24.
    8. Naoki Watanabel & Shohei Yamauchi & Hideaki Sakawa, 2022. "The Board Structure and Performance in IPO Firms: Evidence from Stakeholder-Oriented Corporate Governance," Sustainability, MDPI, vol. 14(13), pages 1-15, July.
    9. Pengda Fan & Kazuo Yamada, 0. "Same bed different dream composition of IPO shares and withdrawal decisions in weak market conditions," Small Business Economics, Springer, vol. 0, pages 1-20.
    10. Klein, Peter G. & Wuebker, Robert & Zoeller, Kathrin, 2016. "Relationship banking and conflicts of interest: Evidence from German initial public offerings," Journal of Corporate Finance, Elsevier, vol. 39(C), pages 210-221.

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    More about this item

    Keywords

    Banks; Venture capital; Lending relationship; Board of directors; Financial expertise;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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