Bank competition and firms' dependence: evidence from firms' role. Issue 10 (25th February 2021)

• Record Type: Journal Article
• Authors: Wang, Chih-Wei; Lee, Chien-Chiang; Yin, Chi; Choo, Min-Rui
• Is Part Of: Applied economics. Volume 53:Issue 10(2021)
• Page Start: 1143
• Page End: 1162
• Publication Date: 2021-02-25
• Subjects: Firms' dependence -- bank competition -- family control firms -- individual bank; G20 -- G21; Economics -- Periodicals; 330
• DOI: 10.1080/00036846.2020.1827134
• Languages: English
• ISSNs: 0003-6846

Abstract

ABSTRACT: This research provides empirical evidence on bank-firm relationships from firms' role in discussing their dependence on banks from the perspectives of bank competition. Using a rich dataset of loans, we find that firms reduce their dependence on banks when banks operate in a more competitive environment. These effects are more pronounced when firms are financially distressed and constrained. Moreover, firms with active family control exhibit less dependence on lenders in a competitive environment. Our evidence provides specific strategies and self-consideration of borrowers and lenders.