Management Science and Financial Engineering

The Korean Operations Research and Management Science Society (한국경영과학회)
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Bank's Market Power and Firm Access to Capital Markets in Asia

  • Lee, Sunglyong (Economic Research Institute, Industrial Bank of Korea) ;
  • Seol, Youn (School of Business Administration, Kyungpook National University)
  • Received : 2013.01.25
  • Accepted : 2013.02.14
  • Published : 2013.05.31
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Abstract

We investigate the effect of bank's market power on financing constraints of non-financial firms in 11 Asian countries between 1995 and 2009. Using firm-level data we analyze financial constraints with the Euler equation derived from the dynamic investment model. We find that with a highly concentrated banking sector firms which have high market power are less financially constrained. These results are consistent with an information-based hypothesis that more market power increases bank's advantage to produce information on potential borrowers.

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References

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