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Concentration, Hold-up, and Information Revelation in Bank Lending: Evidence From Chilean Firms

In: Banking Market Structure and Monetary Policy

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Author Info

  • Álvaro García

    (Banco Central de Chile)

  • Andrea Repetto

    (Universidad Adolfo Ibañez)

  • Sergio Rodríguez

    (Superintendencia de Bancos e Instituciones Financieras)

  • Rodrigo O. Valdés

    (International Monetary Fund)

Abstract

In this paper we empirically study bank-client relationships using a sample of Chilean manufacturing firms. We examine whether concentration and the duration of bank-firm relationships affect the volume of bank lending. Our results indicate that lower concentration, measured by the number of banks a firm borrows from, is associated with a large and positive effect on borrowing. The length of borrower-lender relationships has a positive -although not always statistically significant- effect on the amount borrowed.

(This abstract was borrowed from another version of this item.)

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Bibliographic Info

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This chapter was published in: Luis Antonio Ahumada & J. Rodrigo Fuentes & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.) Banking Market Structure and Monetary Policy, , chapter 7, pages 211-240, 2004.

This item is provided by Central Bank of Chile in its series Central Banking, Analysis, and Economic Policies Book Series with number v07c07pp211-240.

Handle: RePEc:chb:bcchsb:v07c07pp211-240

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  1. Liu, Lili, 1993. "Entry-exit, learning, and productivity change Evidence from Chile," Journal of Development Economics, Elsevier, Elsevier, vol. 42(2), pages 217-242, December.
  2. Cole, Rebel A., 1998. "The importance of relationships to the availability of credit," Journal of Banking & Finance, Elsevier, Elsevier, vol. 22(6-8), pages 959-977, August.
  3. Fohlin, Caroline, 1996. "Relationship Banking, Liquidity, and Investment in the German Industrialization," Working Papers, California Institute of Technology, Division of the Humanities and Social Sciences 913, California Institute of Technology, Division of the Humanities and Social Sciences.
  4. Robert Marquez, 2002. "Competition, Adverse Selection, and Information Dispersion in the Banking Industry," Review of Financial Studies, Society for Financial Studies, Society for Financial Studies, vol. 15(3), pages 901-926.
  5. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 9(4), pages 27-48, Fall.
  6. Nicola Cetorelli & Michele Gambera, 1999. "Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data," Center for Financial Institutions Working Papers, Wharton School Center for Financial Institutions, University of Pennsylvania 00-19, Wharton School Center for Financial Institutions, University of Pennsylvania.
  7. Boot, Arnoud W A & Thakor, Anjan, 1997. "Can Relationship Banking Survive Competition?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1592, C.E.P.R. Discussion Papers.
  8. Toni M. Whited, 1990. "Debt, liquidity constraints, and corporate investment: evidence from panel data," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 114, Board of Governors of the Federal Reserve System (U.S.).
  9. Houston, Joel & James, Christopher, 1996. " Bank Information Monopolies and the Mix of Private and Public Debt Claims," Journal of Finance, American Finance Association, American Finance Association, vol. 51(5), pages 1863-89, December.
  10. Petersen, Mitchell A & Rajan, Raghuram G, 1994. " The Benefits of Lending Relationships: Evidence from Small Business Data," Journal of Finance, American Finance Association, American Finance Association, vol. 49(1), pages 3-37, March.
  11. Blackwell, David W & Winters, Drew B, 1997. "Banking Relationships and the Effect of Monitoring on Loan Pricing," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 20(2), pages 275-89, Summer.
  12. Steven A. Sharpe, 1989. "Asymmetric information, bank lending, and implicit contracts: a stylized model of customer relationships," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 70, Board of Governors of the Federal Reserve System (U.S.).
  13. Rajan, Raghuram G, 1992. " Insiders and Outsiders: The Choice between Informed and Arm's-Length Debt," Journal of Finance, American Finance Association, American Finance Association, vol. 47(4), pages 1367-400, September.
  14. Allen, Franklin, 1990. "The market for information and the origin of financial intermediation," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 1(1), pages 3-30, March.
  15. 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, University of Chicago Press, vol. 68(3), pages 351-81, July.
  16. Diamond, Douglas W, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 51(3), pages 393-414, July.
  17. Huntley Schaller, 1993. "Asymmetric Information, Liquidity Constraints and Canadian Investment," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 26(3), pages 552-74, August.
  18. Bergoeing, Raphael & Repetto, Andrea & Edwards, Sebastian, 2004. "Productivity dynamics," Journal of Development Economics, Elsevier, Elsevier, vol. 75(2), pages 329-332, December.
  19. Juan Pablo Medina & Rodrigo Valdés, 1998. "Flujo de Caja y Decisiones de Inversión en Chile: Evidencia de Sociedades Anónimas Abiertas," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 35(106), pages 301-323.
  20. Chakravarty, Sugato & Scott, James S, 1999. "Relationships and Rationing in Consumer Loans," The Journal of Business, University of Chicago Press, University of Chicago Press, vol. 72(4), pages 523-44, October.
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Cited by:
  1. Raphael Bergoeing & Andrea Repetto & Raimundo Soto, 2003. "Unveiling the Micro-Dynamics of Sustained Growth in Chile," Documentos de Trabajo, Instituto de Economia. Pontificia Universidad Católica de Chile. 248, Instituto de Economia. Pontificia Universidad Católica de Chile..

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