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URL:
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http://ub-madoc.bib.uni-mannheim.de/2729
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URN:
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urn:nbn:de:bsz:180-madoc-27297
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Document Type:
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Working paper
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Year of publication:
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2004
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Publication language:
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English
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Institution:
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School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
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MADOC publication series:
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Sonderforschungsbereich 504 > Rationalitätskonzepte, Entscheidungsverhalten und ökonomische Modellierung (Laufzeit 1997 - 2008)
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Subject:
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330 Economics
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Classification:
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JEL:
G32 G21 D82 ,
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Subject headings (SWD):
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Kreditgeschäft , Unternehmenskooperation , Kreditrisiko , Portfoliomanagement , Kreditwürdigkeit , Trittbrettfahrerverhalten
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Keywords (English):
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individual-bank lending , multiple-bank lending , monitoring , diversification , free-riding problem
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Abstract:
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This paper analyses banks' choice between lending to firms in exclusive relationships and sharing financing with other banks in a context where both firms and banks are subject to moral hazard problems, and bank monitoring is essential for financing to take place. Multiple-bank lending is optimal whenever the benefit of greater diversification in terms of higher per-project monitoring dominates the costs of free-riding problem and duplication of efforts. The model predicts a greater use of multiple-bank lending when banks are small relative to the size of investment projects, when firms are less profitable, and when poor financial integration, strict regulation and inefficient judicial systems make monitoring more costly. These results are consistent with some empirical observations concerning small business lending and, to some extent, with the formation of syndicates.
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Additional information:
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[Working paper]
![[img]](https://madoc.bib.uni-mannheim.de/style/images/fileicons/application_pdf.png)
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