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The Importance of Bank Seniority for Relationship Lending

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  • Longhofer, Stanley D.
  • Santos, Joao A. C.

Abstract

The authors examine two aspects of a bank's interaction with its borrowers--the relative priority of bank debt and the role of banks as "relationship lenders." They show that making the bank senior improves its incentives to build a relationship with the firm, thereby fulfilling an important function of intermediated debt.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Financial Intermediation.

Volume (Year): 9 (2000)
Issue (Month): 1 (January)
Pages: 57-89

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Handle: RePEc:eee:jfinin:v:9:y:2000:i:1:p:57-89

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Web page: http://www.elsevier.com/locate/inca/622875

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References

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  18. Boot, Arnoud W A & Thakor, Anjan, 1997. "Can Relationship Banking Survive Competition?," CEPR Discussion Papers 1592, C.E.P.R. Discussion Papers.
  19. Berger, Allen N & Udell, Gregory F, 1995. "Relationship Lending and Lines of Credit in Small Firm Finance," The Journal of Business, University of Chicago Press, vol. 68(3), pages 351-81, July.
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