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Do Firms Benefit from Multiple Banking Relationships?: Evidence from Small and Medium-Sized Firms in Japan

  • Masayo Shikimi (Tomiyama)

This paper examines empirically the effects of multiple banking relationships on the cost and availability of credit. The analysis is based on an unbalanced panel data set for Japanese small and medium-sized firms over the period 2000-2002. The Hausman-Taylor estimator is used to allow for possible correlation between unobservable heterogeneity among firms and multiple banking relationships. The results suggest that the cost of credit is positively correlated with the number of banking relationships when the endogeneity of the banking relationships is considered. Multiple banking relationships have a positive effect on the availability of credit for financially constrained firms.

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File URL: http://hi-stat.ier.hit-u.ac.jp/research/discussion/2004/pdf/D04-70.pdf
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Paper provided by Institute of Economic Research, Hitotsubashi University in its series Hi-Stat Discussion Paper Series with number d04-70.

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Date of creation: Jan 2005
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Handle: RePEc:hst:hstdps:d04-70
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