A Firms Optimal Number of Bank Relationships and the Extend of Information Disclosure

Ruckes, Martin ; Rheinbaben, Joachim von

URL: http://www.vwl.uni-mannheim.de/gk/wp/gkwp-1997-01....
Document Type: Working paper
Year of publication: 1997
The title of a journal, publication series: GK Working Paper Series
Volume: 97-01
Place of publication: Mannheim
Publication language: English
Institution: School of Law and Economics > Graduiertenkolleg VWL/BWL
Subject: 330 Economics
Abstract: In this paper we analyze a firm's optimal choice of the number of creditors and the extent of information disclosed to them. By dealing with many banks and disclosing essential confidential information, a firm can keep its cost of credit low. This, however, is associated with a relatively high probability that valuable information leaks to competitors, leading to lower expected net returns from product market operations. Taking these costs into account, a highly rated firm tends to deal with many banks and discloses little private information. A firm discloses private information if its credit rating and the costs of information leakage are low.

Dieser Eintrag ist Teil der Universitätsbibliographie.

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