English, Article, Journal or magazine article edition: Multiple but Asymmetric Bank Financing: The Case of Relationship Lending Ralf Elsas; Frank Heinemann; Marcel Tyrell

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Bookmark: http://trove.nla.gov.au/version/1649
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Multiple but Asymmetric Bank Financing: The Case of Relationship Lending
Author
  • Ralf Elsas
  • Frank Heinemann
  • Marcel Tyrell
Physical Description
  • preprint
Notes
  • RePEc:fra:franaf:141
  • Empirical evidence suggests that even those firms presumably most in need of monitoring-intensive financing (young, small, and innovative firms) have a multitude of bank lenders, where one may be special in the sense of relationship lending. However, theory does not tell us a lot about the economic rationale for relationship lending in the context of multiple bank financing. To fill this gap, we analyze the optimal debt structure in a model that allows for multiple but asymmetric bank financing. The optimal debt structure balances the risk of lender coordination failure from multiple lending and the bargaining power of a pivotal relationship bank. We show that firms with low expected cash-flows or low interim liquidation values of assets prefer asymmetric financing, while firms with high expected cash-flow or high interim liquidation values of assets tend to finance without a relationship bank.
  • relationship lending, multiple bank financing, lender coordination
  • RePEc:ces:ceswps:_1251
Language
  • English
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