Financially Interlinked Business Groups
AbstractFinancial interlinkage, in the form of cross-holding of equity and debt between firms, characterize business groups in many countries. We suggest that such financial interlinkage can be viewed as a way to solve credit rationing caused by asymmetric information. If firms possess better information about each other than a bank, then business groups can be a mechanism to induce firms to sort on the basis of this information. Banks can offer a menu of contracts that vary in the extent of financial interlinkage to induce firms to self-select on the basis of the equilibrium composition of the business groups they can form.
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.
Bibliographic InfoPaper provided by Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University in its series CEI Working Paper Series with number 2002-5.
Length: 35 p.
Date of creation: Sep 2002
Date of revision:
Note: May 24, 2001
Contact details of provider:
Postal: 2-1 Naka, Kunitachi, Tokyo 186-8603
Web page: http://cei.ier.hit-u.ac.jp/
More information through EDIRC
business groups; cross-holding of debt and equity; financial interlinkage;
Other versions of this item:
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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.:
- de Meza, David & Webb, David C, 1987. "Too Much Investment: A Problem of Asymmetric Information," The Quarterly Journal of Economics, MIT Press, vol. 102(2), pages 281-92, May.
- Busetta, Giovanni & Zazzaro, Alberto, 2012.
"Mutual loan-guarantee societies in monopolistic credit markets with adverse selection,"
Journal of Financial Stability,
Elsevier, vol. 8(1), pages 15-24.
- Giovanni Busetta & Alberto Zazzaro, 2009. "Mutual Loan-Guarantee Societies in Monopolistic Credit Markets with Adverse Selection," Mo.Fi.R. Working Papers 33, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
- Macchiavello, Rocco, 2010.
"Vertical integration and investor protection in developing countries,"
Journal of Development Economics,
Elsevier, vol. 93(2), pages 162-172, November.
- Rocco Macchiavello, 2009. "Vertical Integration and Investor Protection in Developing Countries," Working Papers 2009.86, Fondazione Eni Enrico Mattei.
- repec:ner:leuven:urn:hdl:123456789/306604 is not listed on IDEAS
- Bhaumik, Sumon K. & Zhou, Ying, 2014. "Do Business Groups Help or Hinder Technological Progress in Emerging Markets? Evidence from India," IZA Discussion Papers 7885, Institute for the Study of Labor (IZA).
- Christa Hainz, 2007.
"Business Groups in Emerging Markets: Financial Control and Sequential Investments,"
Journal of Institutional and Theoretical Economics (JITE),
Mohr Siebeck, Tübingen, vol. 163(2), pages 336-355, June.
- Christa Hainz, 2006. "Business Groups in Emerging Markets – Financial Control and Sequential Investment," CESifo Working Paper Series 1763, CESifo Group Munich.
- Hainz, Christa, 2006. "Business Groups in Emerging Markets - Financial Control and Sequential Investment," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 124, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- repec:ner:leuven:urn:hdl:123456789/306622 is not listed on IDEAS
- repec:ner:leuven:urn:hdl:123456789/388047 is not listed on IDEAS
- repec:ner:leuven:urn:hdl:123456789/388011 is not listed on IDEAS
- Giovanni BUSETTA & Alberto ZAZZARO, 2006. "Mutual Loan-Guarantee Societies in Credit Markets with Adverse Selection: Do They Act as a Sorting Device?," Working Papers 273, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
- repec:ner:leuven:urn:hdl:123456789/387990 is not listed on IDEAS
- Christa Hainz, 2006. "Business Groups in Emerging Markets-Financial Control & Sequential Investment," William Davidson Institute Working Papers Series wp830, William Davidson Institute at the University of Michigan.
- repec:ner:leuven:urn:hdl:123456789/264500 is not listed on IDEAS
- repec:ner:leuven:urn:hdl:123456789/387728 is not listed on IDEAS
- repec:ner:leuven:urn:hdl:123456789/311908 is not listed on IDEAS
- Feenstra, Robert C. & Huang, Deng-Shing & Hamilton, Gary G., 2003. "A market-power based model of business groups," Journal of Economic Behavior & Organization, Elsevier, vol. 51(4), pages 459-485, August.
- Rocco Macchiavello, 2007. "Vertical Integration, Missing Middle and Investor Protection in Developing Countries," Economics Series Working Papers 373, University of Oxford, Department of Economics.
- repec:ner:leuven:urn:hdl:123456789/385978 is not listed on IDEAS
- Gonenc, Halit & Hermes, Niels, 2008. "Propping: Evidence from new share issues of Turkish business group firms," Journal of Multinational Financial Management, Elsevier, vol. 18(3), pages 261-275, July.
- Anaïs HAMELIN, 2013. "Does Size Matter? Firm And Business Group Size Influence On The Benefits Of Group Affiliation," Working Papers of LaRGE Research Center 2013-10, Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg (France).
- Atif Ikram & Syed Ali Asjad Naqvi, 2005. "Family Business Groups and Tunneling Framework : Application and Evidence from Pakistan," Microeconomics Working Papers 22263, East Asian Bureau of Economic Research.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Reiko Suzuki).
If references are entirely missing, you can add them using this form.