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.
|Place of Publication||Tilburg|
|Number of pages||38|
|Publication status||Published - 2000|
|Name||CentER Discussion Paper|
- bank relationships
- firm profitability