Do Relationships Have Limits? Banking Relationships, Financial Constraints, and Investment
AbstractUsing detailed information on the debt structure of 250 publicly traded U.S. firms over the 1980-93 period, we find that the sensitivity of investment to internally generated funds increases with a firm's reliance on bank financing. Bank-dependent firms also hold larger stocks of liquid assets and have lower dividend payout rates. However, the greater cash sensitivity of investment for bank-dependent firms arises only for the largest capital expenditures (relative to assets). For most levels of investment spending, bank-dependent firms appear to be slightly less cash-flow-constrained than firms with access to public debt markets. Copyright 2001 by University of Chicago Press.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Business.
Volume (Year): 74 (2001)
Issue (Month): 3 (July)
Contact details of provider:
Web page: http://www.journals.uchicago.edu/JB/
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Ogawa, Kazuo & Sterken, Elmer & Tokutsu, Ichiro, 2007. "Why do Japanese firms prefer multiple bank relationship? Some evidence from firm-level data," Economic Systems, Elsevier, vol. 31(1), pages 49-70, March.
- Emilia Bonaccorsi di Patti & Giorgio Gobbi, 2003. "The effects of bank mergers on credit availability: evidence from corporate data," Temi di discussione (Economic working papers) 479, Bank of Italy, Economic Research and International Relations Area.
- Gajewski, Krzysztof & Pawłowska, Małgorzata & Rogowski, Wojciech, 2012.
"Relacje firm z bankami w Polsce w świetle danych ze sprawozdawczości bankowej
[Bank-firm relationships in Poland in the light of data from bank reporting]," MPRA Paper 42544, University Library of Munich, Germany, revised 29 Oct 2012.
- Xavier Freixas, 2005. "Deconstructing relationship banking," Investigaciones Economicas, Fundación SEPI, vol. 29(1), pages 3-31, January.
- Goddard, John & Molyneux, Philip & Wilson, John O.S. & Tavakoli, Manouche, 2007. "European banking: An overview," Journal of Banking & Finance, Elsevier, vol. 31(7), pages 1911-1935, July.
- Allayannis, George & Mozumdar, Abon, 2004. "The impact of negative cash flow and influential observations on investment-cash flow sensitivity estimates," Journal of Banking & Finance, Elsevier, vol. 28(5), pages 901-930, May.
- Mehdi Nekhili & Dhikra Chebbi Nekhili & Nicolas Vaillant, 2009. "What matters more in R&D and Capital Expenditures Financing by Japanese Firms:Multinationality or Bank Affiliation?," Working Papers FARGO 1090103, Université de Bourgogne - Leg (laboratoire d'économie et de gestion)/Fargo (Research center in Finance,organizational ARchitecture and GOvernance).
- Catherine Fuss & Philip Vermeulen, 2006. "The response of firms\u2019 investment and financing to adverse cash flow shocks : the role of bank relationships," Working Paper Research 87, National Bank of Belgium.
- Fukuda, Shin-ichi & Kasuya, Munehisa & Akashi, Kentaro, 2009.
"Impaired bank health and default risk,"
Pacific-Basin Finance Journal,
Elsevier, vol. 17(2), pages 145-162, April.
- Schoubben, Frederiek & Van Hulle, Cynthia, 2008. "The impact of growth opportunities on the investment-cash flow sensitivity," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/384305, Katholieke Universiteit Leuven.
- Schoubben, Frederiek & Van Hulle, Cynthia, 2008. "The impact of growth opportunities on the investment-cash flow sensitivity," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/200999, Katholieke Universiteit Leuven.
- Yasuda, Ayako, 2007. "Bank relationships and underwriter competition: Evidence from Japan," Journal of Financial Economics, Elsevier, vol. 86(2), pages 369-404, November.
- Fuss, Catherine & Vermeulen, Philip, 2006. "The response of firms‘ investment and financing to adverse cash flow shocks: the role of bank relationships," Working Paper Series 0658, European Central Bank.
- Elsas, Ralf & Krahnen, Jan Pieter, 2003. "Universal Banks and Relationships with Firms," CFS Working Paper Series 2003/20, Center for Financial Studies (CFS).
- Islam, Saiyid S. & Mozumdar, Abon, 2007. "Financial market development and the importance of internal cash: Evidence from international data," Journal of Banking & Finance, Elsevier, vol. 31(3), pages 641-658, March.
- Sohn, Wook, 2010. "Market response to bank relationships: Evidence from Korean bank reform," Journal of Banking & Finance, Elsevier, vol. 34(9), pages 2042-2055, September.
- Schleicher, Thomas & Tahoun, Ahmed & Walker, Martin, 2010. "IFRS adoption in Europe and investment-cash flow sensitivity: Outsider versus insider economies," The International Journal of Accounting, Elsevier, vol. 45(2), pages 143-168, June.
- Dino Falaschetti & Michael Orlando, 2003. "Cutting the Dividends Tax…and Corporate Governance Too?," Finance 0311008, EconWPA.
- Gao, Wenlian, 2008. "Banks as lenders and shareholders: Evidence from Japan," Pacific-Basin Finance Journal, Elsevier, vol. 16(4), pages 389-410, September.
- Elsas, Ralf, 2005. "Empirical determinants of relationship lending," Journal of Financial Intermediation, Elsevier, vol. 14(1), pages 32-57, January.
- Espenlaub, Susanne & Khurshed, Arif & Sitthipongpanich, Thitima, 2012. "Bank connections, corporate investment and crisis," Journal of Banking & Finance, Elsevier, vol. 36(5), pages 1336-1353.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.