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 InfoPaper provided by Jönköping International Business School in its series JIBS Working Papers with number 2011-7.
Length: 26 pages
Date of creation: 24 Aug 2011
Date of revision:
Contact details of provider:
Postal: Jönköping International Business School, P.O. Box 1026, SE-551 11 Jönköping, Sweden
Web page: http://www.jibs.hj.se/
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financial constraints; switching; main bank power; firm performance; Ukraine.;
Other versions of this item:
- Andreas Stephan & Andriy Tsapin & Oleksandr Talavera, 2012. "Main Bank Power, Switching Costs, and Firm Performance: Theory and Evidence from Ukraine," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 48(2), pages 76-93, March.
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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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