KTH/CESIS Working Paper Series in Economics and Institutions of Innovation
Why Do Firms Switch Their Main Bank? - theory and evidence from Ukraine
(), Andriy Tsapin
() and Oleksandr Talavera
Abstract: We examine why firms change their main bank and how this
affects loans, interest payments and firm performance after switching.
Using unique firm-bank matched Ukrainian data, the treatment effect
estimates suggest that more transparent and riskier companies are more
likely to switch their main bank. Importantly,main bank power, measured by
equity holdings, appears to be one of the main drivers of firm switching
behavior. Furthermore, we find that firms have lower performance after
changing their main bank as they have to contend with higher interest
Keywords: financial constraints; switching; main bank power; firm performance; Ukraine; (follow links to similar papers)
JEL-Codes: G21; G30; G32; (follow links to similar papers)
29 pages, June 4, 2009
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