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Bank market power and firm performance

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  • Manthos D. Delis
  • Sotirios Kokas
  • Steven Ongena

Abstract

Does bank market power affect firm performance? We answer this question by examining 25,236 syndicated loan facilities granted between 2000 and 2010 by 296 banks to 9,029 US non-financial firms. Even though recently poorly-performing firms obtain loans from banks with more market power, we find that in the year after loan origination bank market power positively affects firm performance, albeit mostly for moderate levels of market power. Our estimates thus suggest that a moderate level of bank market power not only facilitates access to credit by poorly-performing firms but also boosts the performance of those firms that obtain it.

Suggested Citation

  • Manthos D. Delis & Sotirios Kokas & Steven Ongena, 2015. "Bank market power and firm performance," University of Cyprus Working Papers in Economics 02-2015, University of Cyprus Department of Economics.
  • Handle: RePEc:ucy:cypeua:02-2015
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:finsta:v:40:y:2019:i:c:p:53-63 is not listed on IDEAS
    2. Delis, Manthos & Politsidis, Panagiotis & Sarno, Lucio, 2018. "Foreign currency lending," MPRA Paper 88197, University Library of Munich, Germany.
    3. Gupta, Abhimanyu & Kokas, Sotirios & Michaelides, Alexander, 2017. "Credit Market Spillovers: Evidence from a Syndicated Loan Market Network," CEPR Discussion Papers 12424, C.E.P.R. Discussion Papers.
    4. repec:eee:corfin:v:46:y:2017:i:c:p:170-185 is not listed on IDEAS
    5. Davydov, Denis, 2016. "Debt structure and corporate performance in emerging markets," Research in International Business and Finance, Elsevier, vol. 38(C), pages 299-311.
    6. repec:eee:ecanpo:v:62:y:2019:i:c:p:116-130 is not listed on IDEAS
    7. Deli, Yota & Delis, Manthos D. & Hasan, Iftekhar & Liu, Liuling, 2016. "Bank enforcement actions and the terms of lending," Research Discussion Papers 23/2016, Bank of Finland.
    8. repec:eee:glofin:v:40:y:2019:i:c:p:1-12 is not listed on IDEAS

    More about this item

    Keywords

    Bank market power; Lerner index; Firm performance; Syndicated loans;

    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
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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