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Bank competition and firms’ dependence: evidence from firms’ role

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  • Chih-Wei Wang
  • Chien-Chiang Lee
  • Chi Yin
  • Min-Rui Choo

Abstract

This research provides empirical evidence on bank-firm relationships from firms’ role in discussing their dependence on banks from the perspectives of bank competition. Using a rich dataset of loans, we find that firms reduce their dependence on banks when banks operate in a more competitive environment. These effects are more pronounced when firms are financially distressed and constrained. Moreover, firms with active family control exhibit less dependence on lenders in a competitive environment. Our evidence provides specific strategies and self-consideration of borrowers and lenders.

Suggested Citation

  • Chih-Wei Wang & Chien-Chiang Lee & Chi Yin & Min-Rui Choo, 2021. "Bank competition and firms’ dependence: evidence from firms’ role," Applied Economics, Taylor & Francis Journals, vol. 53(10), pages 1143-1162, February.
    • Handle: RePEc:taf:applec:v:53:y:2021:i:10:p:1143-1162
    DOI: 10.1080/00036846.2020.1827134
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    Cited by:

    1. Hsieh, Meng-Fen & Lee, Chien-Chiang & Lin, Yi-Ching, 2022. "New evidence on liquidity creation and bank capital: The roles of liquidity and political risk," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 778-794.

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