Have banks filled the gap? Credit as a mechanism of corporate governance in a transition country: example of Poland
AbstractPoland, as any other transition country, suffers from inefficient corporate governance as firms have difficulties with obtaining external financing. This paper aims to examine whether bank’s involvement in corporate control reduces information asymmetries, and hence lessens firm’s financial constraints – phenomenon frequently measured by investment-cash flow sensitivity. In the sample of all non-financial companies listed during 1999-2002 on the Polish stock exchange firms with a close relationship with banks are almost as much financially constrained as firms without such ties. However, the former group relies more heavily on bank loans than on internal capital in their investment activities. In contrast, firms without a close relationship with banks finance to larger extent their investment with internal capital than with credit. It may be interpreted that bank loans are more important source of financing for firms with bank ties than for firms without bank ties.
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 University Library of Munich, Germany in its series MPRA Paper with number 642.
Date of creation: 04 Apr 2005
Date of revision:
corporate control and governance; firm financing; relationship banking; emerging markets;
Find related papers by JEL classification:
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-12-04 (All new papers)
- NEP-BAN-2006-12-04 (Banking)
- NEP-TRA-2006-12-04 (Transition Economics)
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.:
- Patrick M. McGuire, 2004.
"Bank ties and bond market access: evidence on investment-cash flow sensitivity in Japan,"
BIS Working Papers
151, Bank for International Settlements.
- Patrick M. McGuire, 2003. "Bank ties and bond market access : evidence on investment-cash flow sensitivity in Japan," Proceedings 859, Federal Reserve Bank of Chicago.
- Patrick McGuire, 2003. "Bank Ties and Bond Market Access: Evidence on Investment-Cash Flow Sensitivity in Japan," NBER Working Papers 9644, National Bureau of Economic Research, Inc.
- Rajan, Raghuram G & Zingales, Luigi, 2003.
"Banks and Markets: the Changing Character of European Finance,"
CEPR Discussion Papers, C.E.P.R. Discussion Papers
3865, C.E.P.R. Discussion Papers.
- Luigi Zingales & Raghuram G. Rajan, 2003. "Banks and Markets: The Changing Character of European Finance," NBER Working Papers 9595, National Bureau of Economic Research, Inc.
- Kim, Kevin Y. & Park, Kwangwoo & Ratti, Ronald A. & Shin, Hyun-Han, 2004.
"Do Main Banks Extract Rents from Their Client Firms? Evidence from Korean Chaebol,"
Hitotsubashi Journal of Economics, Hitotsubashi University,
Hitotsubashi University, vol. 45(1), pages 15-45, June.
- Kim, Yitae & Park, Kwangwoo & Ratti, Ronald & Shin, Hyun-Han, 2002. "Do Main Banks Extract Rents from their Client Firms? Evidence from Korean Chaebol," CEI Working Paper Series, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University 2002-9, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
- Steven Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1987.
"Financing Constraints and Corporate Investment,"
NBER Working Papers
2387, National Bureau of Economic Research, Inc.
- 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.
- Caroline Fohlin, 1998. "Relationship Banking, Liquidity, and Investment in the German Industrialization," Journal of Finance, American Finance Association, American Finance Association, vol. 53(5), pages 1737-1758, October.
- Gray, Cheryl W. & Holle, Arnold, 1996. "Bank-led restructuring in Poland : an empirical look at the bank conciliation process," Policy Research Working Paper Series 1650, The World Bank.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, American Economic Association, vol. 71(3), pages 393-410, June.
- Bolton, Patrick & Scharfstein, David S, 1990. "A Theory of Predation Based on Agency Problems in Financial Contracting," American Economic Review, American Economic Association, American Economic Association, vol. 80(1), pages 93-106, March.
- Dewatripont, Mathias & Tirole, Jean, 1994.
"A Theory of Debt and Equity: Diversity of Securities and Manager-Shareholder Congruence,"
The Quarterly Journal of Economics, MIT Press,
MIT Press, vol. 109(4), pages 1027-54, November.
- Mathias Dewatripont & Jean Tirole, 1994. "A theory of debt and equity: diversity of securities and manager-shareholder congruence," ULB Institutional Repository 2013/9593, ULB -- Universite Libre de Bruxelles.
- Weller, Christian E., 1999.
"The finance-investment link in a transition economy: Evidence for Poland from panel data,"
ZEI Working Papers
B 04-1999, ZEI - Center for European Integration Studies, University of Bonn.
- Christian Weller, 2001. "The Finance-Investment Link in a Transition Economy: Evidence For Poland From Panel Data," Comparative Economic Studies, Palgrave Macmillan, vol. 43(1), pages 31-52, April.
- Williamson, Oliver E, 1988. " Corporate Finance and Corporate Governance," Journal of Finance, American Finance Association, American Finance Association, vol. 43(3), pages 567-91, July.
- Klapper, Leora F. & Love, Inessa, 2002.
"Corporate governance, investor protection, and performance in emerging markets,"
Policy Research Working Paper Series
2818, The World Bank.
- Klapper, Leora F. & Love, Inessa, 2004. "Corporate governance, investor protection, and performance in emerging markets," Journal of Corporate Finance, Elsevier, Elsevier, vol. 10(5), pages 703-728, November.
- Ferri, Giovanni & Tae Soo Kang & In-June Kim, 2001. "The value of relationship banking during financial crises : evidence from the Republic of Korea," Policy Research Working Paper Series 2553, The World Bank.
- Charles W. Calomiris, 1998. "Universal Banking "American-Style"," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, TÃ¼bingen, Mohr Siebeck, TÃ¼bingen, vol. 154(1), pages 44-, March.
- Cable, John R, 1985. "Capital Market Information and Industrial Performance: The Role of West German Banks," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 95(377), pages 118-32, March.
- Steven N. Kaplan & Luigi Zingales, 1995. "Do Financing Constraints Explain Why Investment is Correlated with Cash Flow?," NBER Working Papers 5267, National Bureau of Economic Research, Inc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.