Heterogeneous Multiple Bank Financing, Optimal Business Risk and Information Disclosure

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper Series: Finance & Accounting ; No. 148

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; Transactional Relationships; Contracts and Reputation; Networks ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages
• Subject: Risk ; Relationship Lending ; Asymmetric Information ; Liquidity Crisis ; Efficiency ; Finanzierungstheorie ; Kredit ; Bank ; Risikomanagement ; Investor Relations ; Projektfinanzierung ; Lieferanten-Kunden-Beziehung ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bannier, Christina E.
• Event: Veröffentlichung
• (who): Johann Wolfgang Goethe-Universität Frankfurt am Main, Fachbereich Wirtschaftswissenschaften
• (where): Frankfurt a. M.
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/23413
• Last update: 10.03.2025, 11:42 AM CET