Bank connections, corporate investment and crisis

Espenlaub, Susanne; Khurshed, Arif; Sitthipongpanich, Thitima

doi:10.1016/j.jbankfin.2011.11.024

Cited by 34 publications

(12 citation statements)

References 53 publications

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“…Therefore, we may expect a more negative effect or a lower positive effect of bank concentration on the cost of debt if banks have greater solvency problems. In line with this argument, Espenlaub et al (2012) examines Thai nonfinancial companies during 1995-2000, a period straddling the East Asian Financial Crisis of 1997-1998. Their results suggest that, while bank connections facilitated corporate investment by reducing the financial constraints faced by companies in the pre-crisis period, they lost their value in the post-crisis period.…”

Section: Banking Structurementioning

confidence: 99%

Institutions, banking structure and the cost of debt: new international evidence

Álvarez‐Botas

González

2019

Accounting & Finance

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Cost of debt, institutions, depth of credit information, banking structure. a We wish to thank participants at the ACEDE Conference in Vigo (2016) for helpful comments and suggestions. Funding from the Spanish Ministry of Economy and Competitiveness via Project ECO2015-66184-R and financial support from the Government of the Principality of Asturias via the Severo Ochoa programme of pre-doctoral grants are gratefully acknowledged.

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Section: Banking Structurementioning

confidence: 99%

Institutions, banking structure and the cost of debt: new international evidence

Álvarez‐Botas

González

2019

Accounting & Finance

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“…The exception is the lack of significance of the capital structure when banks are the largest shareholders (column 1). This result may be due, as suggested by Elston () and Espenlaub et al () to the fact that firms owned by banks have easier access to debt, and thus financial leverage is not a significant determinant of corporate R&D.…”

Section: Resultsmentioning

confidence: 92%

Institutional framework, corporate ownership structure, and R&D investment: an international analysis

López‐Iturriaga

López-Millán

2016

R & D Management

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We combine agency theory with the law and finance approach to analyze how the legal protection of investors and the corporate ownership structure affect corporate investment in research and development (R&D). We use information from 956 firms from the five most R&D-intensive industries in 19 developed countries. Our results show that better protection of investors' rights by the institutional environment has a positive influence on corporate R&D. We also find that corporate ownership concentration works as a substitute for legal protection. This finding means that R&D investment of the firms in the countries with poor legal protection increases as ownership becomes more concentrated. Our results also show that the identity of shareholders has a relevant effect: Whereas banks and nonfinancial institutions as shareholders result in lower R&D, institutional investors as shareholders increase corporate investment in R&D.

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“…Kutsuna et al (2007) find that main bank relationships give small issuers increased access to equity capital markets. Espenlaub et al (2012) investigate the evolution and determinants of connections between firms and banks, and the impact of bank connections on corporate investment.…”

Section: Introductionmentioning

confidence: 99%

Monetary Policy Shock, the Strength of Bank Relationship and Corporate Cash Policy

Luo¹

2014

IJEF

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This paper investigates whether strength of the bank-firm relationship affects the level of cash holding, especially in the tighter period of monetary policy. We measure the strength of bank-firm relationship by holding bank ownership, bank-firm proximity (holding local bank ownership) and the number of holding local bank ownership. We argue that remote location between firm and bank increases the cost of financial external fund, if the headquarters of firms and holding ownership bank are the same province, it is easier for companies to obtain external funding. So the strength of the local bank-firm relationship can ease financial constraint. As expected, stronger evidence supports that firms with stronger bank-firm relationship tend to hold less cash. The firms without stronger bank-firm relationship adjust their level of cash holding more quickly toward target level than holding local bank ownership firms and stronger bank relationship reduces the investment-cash sensitivity. Our findings are in line with our expectations and support both the precautionary motive for holding cash and the pecking order theory.

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Bank connections, corporate investment and crisis

Cited by 34 publications

References 53 publications

Institutions, banking structure and the cost of debt: new international evidence

Institutions, banking structure and the cost of debt: new international evidence

Institutional framework, corporate ownership structure, and R&D investment: an international analysis

Monetary Policy Shock, the Strength of Bank Relationship and Corporate Cash Policy

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