Do Main Banks Extract Rents from their Client Firms?
Kim Yitae, Park Kwangwoo, Ratti Ronald and Hyun-Han, Shin No 2002-9, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University Abstract: Using a unique data set on all industrial firms listed on Korea Stock Exchange and KOSDAQ stock market from 1991 to 2000, we find that cash ratios for chaebol firms are lower than for non-chaebol firms. Controlling for access to the bond market and financial services arms does not change this result. We do however find that there is a shift in the degree of bank power over the last decade. Consistent with the main bank monopoly hypothesis during the corporate restructuring process after the financial crisis in 1997, the interest differential charged to chaebol firms is significantly higher than the earlier period, suggesting extraction of rents against chaebol client firms by main banks. Keywords: Cash holdings; bank power; rent extraction; Korean chaebol (search for similar items in EconPa
Related Questions
- Do national and international brokers, banks and consulting firms have any advantages over regional independents like EmSource?
- How does Blossom Wealth Management differ from brokerage firms, trust companies, banks, and asset management firms?
- What, if any is the main difference in capabilities between the WGE and the Client/Server engines?
