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Dynamics of bank relationships in entrepreneurial finance

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  • Takahashi, Hidenori

Abstract

This study examines the role of commercial bankers in banks' efforts to build relationships with small and young firms. Using Japanese IPO data, this study reveals that banks tend to provide an additional banker to firms with limited financial experts on the board. In addition, the banker's entry as a proxy to establish a lending relationship is more likely to occur before the bank's venture capital (VC) investment. These findings suggest that commercial banks provide bankers to supplement financial expertise in their client's firms and use this relationship to build subsequent VC investment.

Suggested Citation

  • Takahashi, Hidenori, 2015. "Dynamics of bank relationships in entrepreneurial finance," Journal of Corporate Finance, Elsevier, vol. 34(C), pages 23-31.
  • Handle: RePEc:eee:corfin:v:34:y:2015:i:c:p:23-31
    DOI: 10.1016/j.jcorpfin.2015.07.006
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    References listed on IDEAS

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    1. Dittmann, I. & Maug, E. & Schneider, Christoph, 2010. "Bankers on boards of German firms : What they do, what they are worth, and why they are (still) there," Other publications TiSEM 610cf1b5-ae96-4112-9ff3-9, Tilburg University, School of Economics and Management.
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    Cited by:

    1. Randall Morck & Bernard Yeung, 2017. "East Asian Financial and Economic Development," NBER Working Papers 23845, National Bureau of Economic Research, Inc.
    2. repec:eee:pacfin:v:46:y:2017:i:pa:p:94-108 is not listed on IDEAS
    3. repec:eee:respol:v:47:y:2018:i:1:p:49-60 is not listed on IDEAS
    4. Vikas Mehrotra & Randall Morck, 2017. "Governance and Stakeholders," NBER Working Papers 23460, National Bureau of Economic Research, Inc.
    5. Klein, Peter G. & Wuebker, Robert & Zoeller, Kathrin, 2016. "Relationship banking and conflicts of interest: Evidence from German initial public offerings," Journal of Corporate Finance, Elsevier, vol. 39(C), pages 210-221.

    More about this item

    Keywords

    Banks; Venture capital; Lending relationship; Board of directors; Financial expertise;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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