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Bank shareholding and lending: complementarity or substitution? Some evidence from a panel of large Italian firms!

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Author Info
Emilio Barucci (Politecnico di Milano)
Fabrizio Mattesini () (Faculty of Economics, University of Rome "Tor Vergata")

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Abstract

The paper studies the motivations behind banks’ shareholding of non-financial firms using a panel of large Italian companies in the period 1994-2000. Empirical evidence shows that banks are shareholders of companies that are less profitable, have experienced slower growth, are more indebted and are endowed with collateral and have hard time to repay their debt out of current income. Banks are more likely to hold shares in companies they lend to. Overall the evidence suggests that there is complementarity between bank equity holding and lending. A plausible explanation is the shareholder-debtholder conflict, the evidence is weakly compatible with governance and information hypotheses.

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File URL: ftp://www.ceistorvergata.it/repec/rpaper/RP118.pdf
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Publisher Info
Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 118.

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Length: 31 pages
Date of creation: 14 Jul 2008
Date of revision: 14 Jul 2008
Handle: RePEc:rtv:ceisrp:118

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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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Postal: CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma
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Related research
Keywords: Lending; cross shareholding; conflict of interest;

Other versions of this item:

Find related papers by JEL classification:
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

This paper has been announced in the following NEP Reports:

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.:
  1. Cobham, David & Cosci, Stefania & Mattesini, Fabrizio, 1999. "The Italian Financial System: Neither Bank Based nor Market Based," Manchester School, University of Manchester, vol. 67(3), pages 325-45, June. [Downloadable!] (restricted)
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    Other versions:
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  7. Robert Chirinko & Julie Ann Elston, 2003. "Finance, Control, and Profitability: The Influence of German Banks," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  8. Yishay Yafeh & Oved Yosha, 2003. "Large Shareholders and Banks: Who Monitors and How?," Economic Journal, Royal Economic Society, vol. 113(484), pages 128-146, January. [Downloadable!] (restricted)
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    Other versions:
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  14. Petersen, Mitchell A & Rajan, Raghuram G, 1994. " The Benefits of Lending Relationships: Evidence from Small Business Data," Journal of Finance, American Finance Association, vol. 49(1), pages 3-37, March. [Downloadable!] (restricted)
  15. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December. [Downloadable!] (restricted)
    Other versions:
  16. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-85, May. [Downloadable!] (restricted)
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    Other versions:
  19. 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, vol. 53(2), pages 635-672, 04. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, 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.)

  1. Takanori Tanaka, 2009. "Managerial Entrenchment and Corporate Bond Financing: Evidence from Japan," Discussion Papers in Economics and Business 09-10, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP). [Downloadable!]
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