Have banks filled the gap? Credit as a mechanism of corporate governance in a transition country: example of Poland
Poland, as any other transition country, suffers from inefficient corporate governance as firms have difficulties with obtaining external financing. This paper aims to examine whether bank’s involvement in corporate control reduces information asymmetries, and hence lessens firm’s financial constraints – phenomenon frequently measured by investment-cash flow sensitivity. In the sample of all non-financial companies listed during 1999-2002 on the Polish stock exchange firms with a close relationship with banks are almost as much financially constrained as firms without such ties. However, the former group relies more heavily on bank loans than on internal capital in their investment activities. In contrast, firms without a close relationship with banks finance to larger extent their investment with internal capital than with credit. It may be interpreted that bank loans are more important source of financing for firms with bank ties than for firms without bank ties.
|Date of creation:||04 Apr 2005|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Patrick M. McGuire, 2003.
"Bank ties and bond market access : evidence on investment-cash flow sensitivity in Japan,"
859, Federal Reserve Bank of Chicago.
- Patrick M. McGuire, 2004. "Bank ties and bond market access: evidence on investment-cash flow sensitivity in Japan," BIS Working Papers 151, Bank for International Settlements.
- Patrick McGuire, 2003. "Bank Ties and Bond Market Access: Evidence on Investment-Cash Flow Sensitivity in Japan," NBER Working Papers 9644, National Bureau of Economic Research, Inc.
- Klapper, Leora F. & Love, Inessa, 2004.
"Corporate governance, investor protection, and performance in emerging markets,"
Journal of Corporate Finance,
Elsevier, vol. 10(5), pages 703-728, November.
- Klapper, Leora F. & Love, Inessa, 2002. "Corporate governance, investor protection, and performance in emerging markets," Policy Research Working Paper Series 2818, The World Bank.
- Rajan, Raghuram G & Zingales, Luigi, 2003.
"Banks and Markets: the Changing Character of European Finance,"
CEPR Discussion Papers
3865, C.E.P.R. Discussion Papers.
- Luigi Zingales & Raghuram G. Rajan, 2003. "Banks and Markets: The Changing Character of European Finance," NBER Working Papers 9595, National Bureau of Economic Research, Inc.
- Kim, Kevin Y. & Park, Kwangwoo & Ratti, Ronald A. & Shin, Hyun-Han, 2004.
"Do Main Banks Extract Rents from Their Client Firms? Evidence from Korean Chaebol,"
Hitotsubashi Journal of Economics,
Hitotsubashi University, vol. 45(1), pages 15-45, June.
- Kim, Yitae & Park, Kwangwoo & Ratti, Ronald & Shin, Hyun-Han, 2002. "Do Main Banks Extract Rents from their Client Firms? Evidence from Korean Chaebol," CEI Working Paper Series 2002-9, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
- Gray, Cheryl W. & Holle, Arnold, 1996. "Bank-led restructuring in Poland : an empirical look at the bank conciliation process," Policy Research Working Paper Series 1650, The World Bank.
- Weller, Christian E., 1999.
"The finance-investment link in a transition economy: Evidence for Poland from panel data,"
ZEI Working Papers
B 04-1999, University of Bonn, ZEI - Center for European Integration Studies.
- Christian Weller, 2001. "The Finance-Investment Link in a Transition Economy: Evidence For Poland From Panel Data," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 43(1), pages 31-52, April.
- Caroline Fohlin, 1998.
"Relationship Banking, Liquidity, and Investment in the German Industrialization,"
Journal of Finance,
American Finance Association, vol. 53(5), pages 1737-1758, October.
- Fohlin, Caroline, 1996. "Relationship Banking, Liquidity, and Investment in the German Industrialization," Working Papers 913, California Institute of Technology, Division of the Humanities and Social Sciences.
- Steven M. Fazzari & R. Glenn Hubbard & BRUCE C. PETERSEN, 1988.
"Financing Constraints and Corporate Investment,"
Brookings Papers on Economic Activity,
Economic Studies Program, The Brookings Institution, vol. 19(1), pages 141-206.
- Konings, Jozef & Rizov, Marian & Vandenbussche, Hylke, 2003. "Investment and financial constraints in transition economies: micro evidence from Poland, the Czech Republic, Bulgaria and Romania," Economics Letters, Elsevier, vol. 78(2), pages 253-258, February.
- Steven N. Kaplan & Luigi Zingales, 1995. "Do Financing Constraints Explain Why Investment is Correlated with Cash Flow?," NBER Working Papers 5267, National Bureau of Economic Research, Inc.
- Charles W. Calomiris, 1998. "Universal Banking "American-Style"," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 154(1), pages 44-, March.
- Williamson, Oliver E, 1988. " Corporate Finance and Corporate Governance," Journal of Finance, American Finance Association, vol. 43(3), pages 567-591, July.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Ferri, Giovanni & Tae Soo Kang & In-June Kim, 2001. "The value of relationship banking during financial crises : evidence from the Republic of Korea," Policy Research Working Paper Series 2553, The World Bank.
- Mathias Dewatripont & Jean Tirole, 1994.
"A Theory of Debt and Equity: Diversity of Securities and Manager-Shareholder Congruence,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 109(4), pages 1027-1054.
- Mathias Dewatripont & Jean Tirole, 1994. "A theory of debt and equity: diversity of securities and manager-shareholder congruence," ULB Institutional Repository 2013/9593, ULB -- Universite Libre de Bruxelles.
- Cable, John R, 1985. "Capital Market Information and Industrial Performance: The Role of West German Banks," Economic Journal, Royal Economic Society, vol. 95(377), pages 118-32, March.
- Bolton, Patrick & Scharfstein, David S, 1990. "A Theory of Predation Based on Agency Problems in Financial Contracting," American Economic Review, American Economic Association, vol. 80(1), pages 93-106, March.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:642. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.