Is there a hold-up benefit in heterogeneous multiple bank financing?

This paper studies the effects that heterogeneous multiple bank financing hason a firm’s risk- and information-policy, particularly with respect to credit rene-gotiation efficiency. We find that a significant, yet limited, degree of relationshiplending enables firms with high asset specificity to credibly signal their desire toabstain from strategic default. This allows the firm’s policy to eliminate the riskof inefficient liquidation even in the case of bleak cash-flow expectations. This“hold-up benefit” comes at a cost, though: firms with low asset specificity cannotalways eliminate the risk of coordination failure by their banks.