The number of banking relationships and the business cycle: New evidence from Colombia
We study the determinants of multiple bank-firm relationships using a uniquely rich data set comprised of information on individual loans of a large number of firms in Colombia. We control for firm-specific variables and find that the business cycle exerts important influence on the number of bank relationships sustained by firms. Our evidence suggests that the number of bank relationships is counter-cyclical, decreasing during macroeconomic expansions and increasing during contractions. However, this effect is stronger for large firms which have more access to alternative sources of funding.
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Volume (Year): 35 (2011)
Issue (Month): 3 (September)
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