Banking sector deregulation, bank-firm relationships and corporate leverage

Fabio Braggion, S.R.G. Ongena

Research output: Contribution to journalArticleScientificpeer-review


We study the effects of the 1971 deregulation of UK banking on firms’ financial and investment policies. The deregulation was a turning point in the evolution of firm–bank relationships during the twentieth century. Indeed, for more than 80 years prior to deregulation most firms had had a relationship with only one bank: this was no longer the case from 1971 on. Deregulation and intensifying competition in the banking sector spurred firms—in local markets with many banks already active—to increase leverage and to invest more in research and development. Bank debt similarly expanded while trade credit contracted.
Original languageEnglish
Pages (from-to)765-789
JournalThe Economic Journal
Issue number618
Early online date7 Dec 2017
Publication statusPublished - Feb 2019


  • banking sector
  • competition
  • multiple banking


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