A Century of Firm ? Bank Relationships: Did Banking Sector Deregulation Spur Firms to Add Banks and Borrow More?
Steven Ongena and
Fabio Braggion
No 9695, CEPR Discussion Papers from C.E.P.R. Discussion Papers
Abstract:
We study how firm-bank relationships and corporate financing evolved during the Twentieth century in Britain. We document a remarkable transition from single to multiple relationships. Transparent, larger, and global companies were more likely to add a bank, especially when located in more competitive local banking markets. Deregulation and intensifying competition in the banking sector during the 1970s spurred banks to supply credit through multilateral arrangements. Firms that added a bank following deregulation borrowed more than similar firms that did not add a bank, and their bank debt expanded while their trade credit and share issuance contracted.
Keywords: Banking sector; Competition; Multiple banking (search for similar items in EconPapers)
JEL-codes: G21 N23 N24 (search for similar items in EconPapers)
Date: 2013-10
New Economics Papers: this item is included in nep-ban, nep-his and nep-reg
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Citations: View citations in EconPapers (7)
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