Investment in relationship-specific assets: Does finance matter?

Arbeitspapier

Existing literature sees opportunistic behaviour of contractual partners as the main reason why rational agents underinvest in relationship-specific assets. We look beyond this well-know holdup problem and argue that financial vulnerability and short-term planning horizon can also lead to such underinvestment. Subsequently, banks can stimulate growth-enhancing investment in relationship-specific assets by signalling creditworthiness and long-term planning horizon of their borrowers. We empirically confirm this hypothesis by showing that industries dependent on relationship-specific investment from their suppliers grow disproportionately faster in countries with a strong banking sector.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 3349

Classification and Topics

• Classification: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance ; Economic Growth and Aggregate Productivity: General
• Subject: financial development ; relationship-specific investment ; growth ; Investition ; Lieferanten-Kunden-Beziehung ; Finanzintermediär ; Finanzsektor ; Entwicklung ; Branchenentwicklung ; Schätzung ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Strieborny, Martin ; Kukenova, Madina
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/46275
• Last update: 10.03.2025, 11:44 AM CET