Bank Relationship and Firm Profitability

H.A. Degryse, S. Ongena

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Abstract

This paper examines how bank relationships affect firm performance. An empirical implication of recent theoretical models is that firms maintaining multiple bank relationships are less profitable than their single-bank peers. We investigate this empirical implication using a data set containing virtually all Norwegian publicly listed firms for the period 1979-1995. We find that profitability is substantially higher if firms maintain only a single bank relationship. We also find that firms replacing a single bank relationship are on average smaller and younger than firms not replacing a single bank relationship.
Original languageEnglish
Place of PublicationTilburg
PublisherFinance
Number of pages38
Volume2000-14
Publication statusPublished - 2000

Publication series

NameCentER Discussion Paper
Volume2000-14

Keywords

  • bank relationships
  • firm profitability

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  • Cite this

    Degryse, H. A., & Ongena, S. (2000). Bank Relationship and Firm Profitability. (CentER Discussion Paper; Vol. 2000-14). Finance.