Relationship Banking in Bilateral Oligopoly and Asymmetric Information

No 734, Econometric Society 2004 Far Eastern Meetings from Econometric Society

Abstract: This paper investigates the economic principles underlying the relationship between the real sector (non-financial) and the banking sector structures. Most literature has so far focused on the structure of conglomerates (Keiretsu/Chaebol) in East Asia in explaining the fast economic growth and/or recent crisis in the region. Traditionally, the strong vertical relationship between core companies and their subsidiaries in the real sector was believed to be a driving force for the economic success in the region. However, the degree of vertical relationship varies depending upon macroeconomic fluctuations and subsequently affects their relationship banks. The paper analyses the information sharing in a bilateral oligopoly framework. When banks prefer strong collaterals and/or credible third party repayment guarantees, a weaker vertical relationship in the real sector should lead to a consolidation in the banking sector via mergers or exits. Empirical evidence from the panel data constructed for the top 10 Chaebols and their subsidiaries between 1994-2002 supports the argument

Keywords: Relationship Banking; Bilateral Oligopoly; Vertical Relation; Asymmetric information (search for similar items in EconPapers)
JEL-codes: G21 G28 L13 L59 (search for similar items in EconPapers)
Date: 2004-08-11
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.uea.ac.uk/~j106/RelBk.pdf main text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.uea.ac.uk/~j106/RelBk.pdf [301 Moved Permanently]--> https://www.uea.ac.uk:443/~j106/RelBk.pdf [301 Moved Permanently]--> https://archive.uea.ac.uk/~j106/RelBk.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecm:feam04:734

Access Statistics for this paper

More papers in Econometric Society 2004 Far Eastern Meetings from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Christopher F. Baum ().