Advanced Search
MyIDEAS: Login to save this paper or follow this series

Why Do Firms Switch Their Main Bank?: Theory and Evidence from Ukraine

Contents:

Author Info

  • Andreas Stephan
  • Andriy Tsapin
  • Oleksandr Talavera

Abstract

We examine why firms change their main bank and how this affects loans, interest payments and firm performance after switching. Using unique firm-bank matched Ukrainian data, the treatment effect estimates suggest that more transparent and riskier companies are more likely to switch their main bank. Importantly, main bank power, measured by equity holdings, appears to be one of the main drivers of firm switching behavior. Furthermore, we find that firms have lower performance after changing their main bank as they have to contend with higher interest payments.

Download Info

If 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.
File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.98236.de/dp894.pdf
Download Restriction: no

Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 894.

as in new window
Length: 25 p.
Date of creation: 2009
Date of revision:
Handle: RePEc:diw:diwwpp:dp894

Contact details of provider:
Postal: Mohrenstraße 58, D-10117 Berlin
Phone: xx49-30-89789-0
Fax: xx49-30-89789-200
Email:
Web page: http://www.diw.de/en
More information through EDIRC

Related research

Keywords: Financial constraints; switching; main bank power; firm performance; Ukraine;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Shen, Chung-Hua & Huang, Ai-Hua, 2003. "Are performances of banks and firms linked? And if so, why?," Journal of Policy Modeling, Elsevier, Elsevier, vol. 25(4), pages 397-414, June.
  2. von Thadden, Ernst-Ludwig, 2004. "Asymmetric information, bank lending and implicit contracts: the winner's curse," Finance Research Letters, Elsevier, Elsevier, vol. 1(1), pages 11-23, March.
  3. Ajit Singh, 2003. "Competition, corporate governance and selection in emerging markets," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 113(491), pages F443-F464, November.
  4. Morck, Randall & Nakamura, Masao & Shivdasani, Anil, 2000. "Banks, Ownership Structure, and Firm Value in Japan," The Journal of Business, University of Chicago Press, University of Chicago Press, vol. 73(4), pages 539-67, October.
  5. Hoshi, Takeo & Kashyap, Anil & Scharfstein, David, 1990. "The role of banks in reducing the costs of financial distress in Japan," Journal of Financial Economics, Elsevier, Elsevier, vol. 27(1), pages 67-88, September.
  6. Raghuram G. Rajan & Luigi Zingales, 1998. "Which Capitalism? Lessons Form The East Asian Crisis," Journal of Applied Corporate Finance, Morgan Stanley, Morgan Stanley, vol. 11(3), pages 40-48.
  7. Andreas Stephan & Andriy Tsapin, 2008. "Persistence and Determinants of Firm Profit in Emerging Markets," Discussion Papers of DIW Berlin 848, DIW Berlin, German Institute for Economic Research.
  8. Farinha, Luisa A. & Santos, Joao A. C., 2002. "Switching from Single to Multiple Bank Lending Relationships: Determinants and Implications," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 11(2), pages 124-151, April.
  9. Delcoure, Natalya, 2007. "The determinants of capital structure in transitional economies," International Review of Economics & Finance, Elsevier, Elsevier, vol. 16(3), pages 400-415.
  10. Andreas Stephan & Oleksandr Talavera & Andriy Tsapin, 2008. "Corporate Debt Maturity Choice in Transition Financial Markets," Discussion Papers of DIW Berlin 784, DIW Berlin, German Institute for Economic Research.
  11. Degryse, H.A. & Ongena, S., 2000. "Bank Relationship and Firm Profitability," Discussion Paper, Tilburg University, Center for Economic Research 2000-14, Tilburg University, Center for Economic Research.
  12. Golodniuk, Inna, 2006. "Evidence on the bank-lending channel in Ukraine," Research in International Business and Finance, Elsevier, Elsevier, vol. 20(2), pages 180-199, June.
  13. Vesala, Timo, 2007. "Switching costs and relationship profits in bank lending," Journal of Banking & Finance, Elsevier, Elsevier, vol. 31(2), pages 477-493, February.
  14. 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.).
  15. Boot, Arnoud W. A., 2000. "Relationship Banking: What Do We Know?," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 9(1), pages 7-25, January.
  16. Ortiz-Molina, H. & Penas, M.F., 2004. "Lending to Small Businesses: The Role of Loan Maturity in Adressing Information Problems," Discussion Paper, Tilburg University, Center for Economic Research 2004-99, Tilburg University, Center for Economic Research.
  17. D'Auria, Claudio & Foglia, Antonella & Reedtz, Paolo Marullo, 1999. "Bank interest rates and credit relationships in Italy," Journal of Banking & Finance, Elsevier, Elsevier, vol. 23(7), pages 1067-1093, July.
  18. Enrica Detragiache & Paolo Garella & Luigi Guiso, 2000. "Multiple versus Single Banking Relationships: Theory and Evidence," Journal of Finance, American Finance Association, American Finance Association, vol. 55(3), pages 1133-1161, 06.
  19. Vasso Ioannidou & Steven Ongena, 2010. ""Time for a Change": Loan Conditions and Bank Behavior when Firms Switch Banks," Journal of Finance, American Finance Association, American Finance Association, vol. 65(5), pages 1847-1877, October.
  20. Hubbard, R Glenn & Kuttner, Kenneth N & Palia, Darius N, 2002. "Are There Bank Effects in Borrowers' Costs of Funds? Evidence from a Matched Sample of Borrowers and Banks," The Journal of Business, University of Chicago Press, University of Chicago Press, vol. 75(4), pages 559-81, October.
  21. Sheard, Paul, 1989. "The main bank system and corporate monitoring and control in Japan," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 11(3), pages 399-422, May.
  22. Agarwal, Rajshree & Ann Elston, Julie, 2001. "Bank-firm relationships, financing and firm performance in Germany," Economics Letters, Elsevier, Elsevier, vol. 72(2), pages 225-232, August.
  23. Nijman, T.E. & Verbeek, M.J.C.M., 1992. "Testing for selectivity in panel data models," Open Access publications from Tilburg University urn:nbn:nl:ui:12-153280, Tilburg University.
  24. Verbeek, Marno, 1990. "On the estimation of a fixed effects model with selectivity bias," Economics Letters, Elsevier, Elsevier, vol. 34(3), pages 267-270, November.
  25. Kim, Moshe & Kliger, Doron & Vale, Bent, 2003. "Estimating switching costs: the case of banking," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 12(1), pages 25-56, January.
  26. Patrick Bolton & Xavier Freixas, 2000. "Equity, Bonds, and Bank Debt: Capital Structure and Financial Market Equilibrium under Asymmetric Information," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 108(2), pages 324-351, April.
  27. David E. Weinstein & Yishay Yafeh, 1998. "On the Costs of a Bank-Centered Financial System: Evidence from the Changing Main Bank Relations in Japan," Journal of Finance, American Finance Association, American Finance Association, vol. 53(2), pages 635-672, 04.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp894. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bibliothek).

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.