The Commitment Effect of Choosing the Same Bank
In a model where firms use external funds to finance R&D investments, we show that they may prefer to borrow from the same bank, rather than going to competing banks. A monopolist bank will capture more of firms' operating profits. But, these profits will also be higher, since having the same bank serves as a commitment device not to spend too much on R&D. In our model, the latter effect dominates.
Year of publication: |
2001-05
|
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Authors: | Haan, Marco ; Riyanto, Yohanes E. ; Toolsema, Linda A. |
Institutions: | Department of Economics, National University of Singapore |
Saved in:
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