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Information Intermediaries: How Commercial Bankers Facilitate Strategic Alliances

Author

Listed:
  • Marc Frattaroli

    (Ecole Polytechnique Fédérale de Lausanne; Swiss Finance Institute)

  • Christoph Herpfer

    (Emory University)

Abstract

We investigate how bankers use private information to help borrowers combine resources in strategic alliances. Firms that have borrowed from the same banker are significantly more likely to enter an alliance. Even indirect connections through a banker network can facilitate alliances. Consistent with bankers overcoming informational frictions, their ability to facilitate alliances decreases with network distance, and is stronger for opaque borrowers. Alliances are associated with positive announcement returns and brokering banks are more likely to receive future underwriting mandates. We exploit quasi-exogenous variation in firms’ banker networks from interstate bank branching deregulation to show that this relationship is causal.

Suggested Citation

  • Marc Frattaroli & Christoph Herpfer, 2018. "Information Intermediaries: How Commercial Bankers Facilitate Strategic Alliances," Swiss Finance Institute Research Paper Series 18-53, Swiss Finance Institute, revised Dec 2018.
  • Handle: RePEc:chf:rpseri:rp1853
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    Cited by:

    1. Herpfer, Christoph, 2021. "The role of bankers in the U.S. syndicated loan market," Journal of Accounting and Economics, Elsevier, vol. 71(2).

    More about this item

    Keywords

    Banking; Strategic Alliances; Information transmission;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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