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Corporate Acquisitions and Bank Relationships

Author

Listed:
  • Steven Poelhekke

    (Vrije Universiteit Amsterdam)

  • Razvan Eduard Vlahu

    (De Nederlandsche Bank)

  • Vadym Volosovych

    (Erasmus University Rotterdam)

Abstract

Using a large dataset of firm-bank and ownership information for 23 European countries over 2008-2015, we study the dynamics of bank relationships after corporate acquisitions and the effects of changing banks on firm performance. Foreign acquirers do not rely on internal capital markets but keep targets' domestic banks. With more domestic banks, firms increase fixed capital and trade credit. In contrast, domestic acquirers remove domestic but add foreign banks. The latter mainly help reduce the cost of financing. We further explore firm and bank heterogeneity and confirm cost of financing and information asymmetry as plausible reasons to change banks.

Suggested Citation

  • Steven Poelhekke & Razvan Eduard Vlahu & Vadym Volosovych, 2021. "Corporate Acquisitions and Bank Relationships," Tinbergen Institute Discussion Papers 21-082/IV, Tinbergen Institute, revised 19 Sep 2026.
  • Handle: RePEc:tin:wpaper:20210082
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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