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Concentration in bank lending, what do we learn from European comparisons ?

Author

Listed:
  • Ydriss Ziane

    (IAE Paris - Sorbonne Business School)

  • Christophe Godlewski

    (LARGE - Laboratoire de recherche en gestion et économie - UNISTRA - Université de Strasbourg - L'europe en mutation : histoire, droit, économie et identités culturelles - UNISTRA - Université de Strasbourg - CNRS - Centre National de la Recherche Scientifique)

Abstract

We empirically investigate the determinants of lenders concentration providing bank loans to European borrowers. We analyze the influence of loan and borrower characteristics but also legal enforcement variables that are expected to influence the financial and strategic decisions related to bank lending concentration. We find that firms tend to diversify sources of financing by reducing concentration when their level of quality is higher and both asymmetric information and the risk of early liquidation are minimal. Furthermore, lenders’ monitoring appears to be an important feature of lending concentration, particularly in order to prevent private benefits extraction by insiders in legal environment where shareholders benefit from better protections.
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Suggested Citation

  • Ydriss Ziane & Christophe Godlewski, 2010. "Concentration in bank lending, what do we learn from European comparisons ?," Post-Print hal-02325553, HAL.
  • Handle: RePEc:hal:journl:hal-02325553
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    Cited by:

    1. Hany Guirguis & Glenn R. Mueller & Joshua Harris & Andrew G. Mueller, 2017. "Did Increased Large Bank Concentration of US Mortgage Loan Originations Explain Rising Originator Profits?," International Real Estate Review, Global Social Science Institute, vol. 20(3), pages 325-348.
    2. Vigneron, Ludovic & Hajj Chehade, Hiba, 2013. "Structuration du pool bancaire de la PME : une revue de la littérature [Structuring SMEs' banks relationships: a review]," MPRA Paper 50498, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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