Main Bank Power, Switching Costs, and Firm Performance: Theory and Evidence from Ukraine
AbstractWe examine firms' motivation to change their main bank and how this switch affects loans, interest payments, and firm performance. Applying treatment effect analysis to unique firm-bank matched Ukrainian data, we find that larger and more highly leveraged companies are more likely to switch their main bank. Importantly, firms tend to switch to a new main bank that holds a higher share of equity in the firm and thus has stronger power. The results also suggest that after switching, firms obtain additional access to bank loans but, on average, have lower profits due to bigger interest payments.
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Bibliographic InfoArticle provided by M.E. Sharpe, Inc. in its journal Emerging Markets Finance and Trade.
Volume (Year): 48 (2012)
Issue (Month): 2 (March)
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Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=111024
financial constraints; firm performance; main bank power; switching; Ukraine;
Other versions of this item:
- Stephan, Andreas & Tsapin , Andriy & Talavera, Oleksandr, 2011. "Main Bank Power, Switching Costs, and Firm Performance: Theory and Evidence from Ukraine," JIBS Working Papers 2011-7, Jönköping International Business School.
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- Tsapin Andriy & Tsapin Oleksandr, 2014. "Corporate Investment and Financial Crisis: Can Under- and Overinvestment Be Mitigated by Banks in an Emerging Market?," EERC Working Paper Series 14/04e, EERC Research Network, Russia and CIS.
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