Banking sector deregulation, bank-firm relationships and corporate leverage

Fabio Braggion, S.R.G. Ongena

Research output: Contribution to journalArticleScientificpeer-review

Abstract

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.
LanguageEnglish
Pages765-789
JournalThe Economic Journal
Volume129
Issue number618
Early online date7 Dec 2017
DOIs
Publication statusPublished - Feb 2019

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Deregulation
Leverage
Bank-firm relationships
Banking sector
Trade credit
Local markets
Turning point
Financial policy
Bank debt
20th century
Investment policy
Banking

Keywords

  • banking sector
  • competition
  • multiple banking

Cite this

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Banking sector deregulation, bank-firm relationships and corporate leverage. / Braggion, Fabio; Ongena, S.R.G.

In: The Economic Journal, Vol. 129, No. 618, 02.2019, p. 765-789.

Research output: Contribution to journalArticleScientificpeer-review

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