Main bank power, Switching Costs, and Firm Performance. Evidence from Ukraine

Andreas Stephan, Oleksandr Talavera () and Andriy Tsapin

No 26, University of East Anglia Applied and Financial Economics Working Paper Series from School of Economics, University of East Anglia, Norwich, UK.

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

Keywords: switching; main bank power; firm performance; Ukraine (search for similar items in EconPapers)
JEL-codes: G21 G30 G32 (search for similar items in EconPapers)
Date: 2011-03-28
New Economics Papers: this item is included in nep-cfn and nep-eff
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