Investment in Relationship-Specific Assets: Does Finance Matter?
(2016) In Review of Finance 20(4). p.1487-1515- Abstract
- Banks (but not stock markets) promote economic growth by facilitating relationship-specific investment between buyers and suppliers of intermediate goods. Combined insights from literature on signaling role of banks and on relationship-specific investment motivate this economic channel: A supplier is reluctant to undertake relationship-specific investment as she cannot observe financial stability and planning horizon of buyer. Banks can mitigate this information asymmetry. Empirical results from 28 industries in 90 countries confirm that industries dependent on relationship-specific investment from their suppliers grow disproportionately faster in countries with a well-developed banking sector. The channel works via increased entry of new... (More)
- Banks (but not stock markets) promote economic growth by facilitating relationship-specific investment between buyers and suppliers of intermediate goods. Combined insights from literature on signaling role of banks and on relationship-specific investment motivate this economic channel: A supplier is reluctant to undertake relationship-specific investment as she cannot observe financial stability and planning horizon of buyer. Banks can mitigate this information asymmetry. Empirical results from 28 industries in 90 countries confirm that industries dependent on relationship-specific investment from their suppliers grow disproportionately faster in countries with a well-developed banking sector. The channel works via increased entry of new firms and higher capital accumulation. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/8245142
- author
- Strieborny, Martin LU and Kukenova, Madina
- organization
- publishing date
- 2016
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- banks and real economy, relationship-specific investment, economic growth, G21, G10, O16, O40
- in
- Review of Finance
- volume
- 20
- issue
- 4
- pages
- 29 pages
- publisher
- Oxford University Press
- external identifiers
-
- scopus:84977103585
- wos:000379777900007
- ISSN
- 1572-3097
- DOI
- 10.1093/rof/rfv049
- language
- English
- LU publication?
- yes
- id
- 096e8b4c-9eea-402e-978d-10933fe99a0f (old id 8245142)
- alternative location
- http://rof.oxfordjournals.org/content/early/2015/10/22/rof.rfv049.abstract
- date added to LUP
- 2016-04-01 13:25:18
- date last changed
- 2022-03-21 18:29:32
@article{096e8b4c-9eea-402e-978d-10933fe99a0f,
abstract = {{Banks (but not stock markets) promote economic growth by facilitating relationship-specific investment between buyers and suppliers of intermediate goods. Combined insights from literature on signaling role of banks and on relationship-specific investment motivate this economic channel: A supplier is reluctant to undertake relationship-specific investment as she cannot observe financial stability and planning horizon of buyer. Banks can mitigate this information asymmetry. Empirical results from 28 industries in 90 countries confirm that industries dependent on relationship-specific investment from their suppliers grow disproportionately faster in countries with a well-developed banking sector. The channel works via increased entry of new firms and higher capital accumulation.}},
author = {{Strieborny, Martin and Kukenova, Madina}},
issn = {{1572-3097}},
keywords = {{banks and real economy; relationship-specific investment; economic growth; G21; G10; O16; O40}},
language = {{eng}},
number = {{4}},
pages = {{1487--1515}},
publisher = {{Oxford University Press}},
series = {{Review of Finance}},
title = {{Investment in Relationship-Specific Assets: Does Finance Matter?}},
url = {{http://dx.doi.org/10.1093/rof/rfv049}},
doi = {{10.1093/rof/rfv049}},
volume = {{20}},
year = {{2016}},
}