Resource title

Heterogeneous Multiple Bank Financing, Optimal Business Risk and Information Disclosure

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Resource description

This paper studies optimal risk-taking and information disclosure by firms that obtain financing from both a ?relationship? bank and ?arm?s-length? banks. We find that firm decisions are asymmetrically influenced by the degree of heterogeneity among banks: lowly-collateralized firms vary optimal risk and information precision along with the degree of relationship lending for projects with low expected cash-flows, while highly-collateralized firms do so for projects with high expected cash-flows. Incidences of inefficient project liquidation are minimized if the former firms rely on relationship banking to a low degree, the latter to a large degree.

Resource author

Christina E. Bannier

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/23413

Resource license

Adapt according to the presented license agreement and reference the original author.