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Main Bank Power, Switching Costs, and Firm Performance: Theory and Evidence from Ukraine
KTH, School of Architecture and the Built Environment (ABE), Centres, Centre for Transport Studies, CTS. KTH, School of Industrial Engineering and Management (ITM), Centres, Centre of Excellence for Science and Innovation Studies, CESIS.
2012 (English)In: Emerging markets finance & trade, ISSN 1540-496X, Vol. 48, no 2, 76-93 p.Article in journal (Refereed) Published
Abstract [en]

We examine firms' motivation to change their main bank and how this switch affects loans, interest payments, and firm performance. Applying treatment effect analysis to unique firm-bank matched Ukrainian data, we find that larger and more highly leveraged companies are more likely to switch their main bank. Importantly, firms tend to switch to a new main bank that holds a higher share of equity in the firm and thus has stronger power. The results also suggest that after switching, firms obtain additional access to bank loans but, on average, have lower profits due to bigger interest payments.

Place, publisher, year, edition, pages
2012. Vol. 48, no 2, 76-93 p.
Keyword [en]
financial constraints, firm performance, main bank power, switching, Ukraine
National Category
Economics and Business
URN: urn:nbn:se:kth:diva-98744DOI: 10.2753/REE1540-496X480205ISI: 000304854600006ScopusID: 2-s2.0-84861622866OAI: diva2:538846
QC 20120702Available from: 2012-07-02 Created: 2012-07-02 Last updated: 2012-07-02Bibliographically approved

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Stephan, Andreas
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