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Universal Banking, Conflicts of Interest and Firm Growth

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Author Info
Lili Xie () (Department of Economics, Ball State University)
Abstract

This paper studies the relationship between universal banking and firm performance. With 40 developing and developed countries, I find that the overall effect of universal banking on firm growth is negative. This suggests that the negative effect of conflicts of interest dominates the positive effect of economies of scale and scope in universal banking. However, in countries with stronger protection of creditors' rights and higher information effciency, conflicts of interest are less likely and the negative relationship between universal banking and firm growth is significantly weaker.

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File URL: http://web.bsu.edu/cob/econ/research/papers/bsuecwp200703xie.pdf
File Format: application/pdf
File Function: First version, 2007
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Publisher Info
Paper provided by Ball State University, Department of Economics in its series Working Papers with number 200703.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length: 35 pages
Date of creation: Jul 2007
Date of revision: Jul 2007
Publication status: Forthcoming in Journal of Financial Services Research
Handle: RePEc:bsu:wpaper:200703

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Related research
Keywords: Universal Banking Firm Incentive Con°icts of Interest Economies of Scope Economies of Scale.

Find related papers by JEL classification:
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment

This paper has been announced in the following NEP Reports:

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