Bank competition and firms’ dependence: evidence from firms’ role

Chih Wei Wang, Chien Chiang Lee, Chi Yin, Min Rui Choo

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

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.

Original languageEnglish
Pages (from-to)1143-1162
Number of pages20
JournalApplied Economics
Volume53
Issue number10
DOIs
StatePublished - 2021

Keywords

  • bank competition
  • family control firms
  • Firms’ dependence
  • individual bank

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