Banking Sector Deregulation, Bank–Firm Relationships and Corporate Leverage

Bibliographic Data

ID9713302
AuthorsFabio Braggion (0000-0002-5918-417X, CentER – Tilburg University), Steven Ongena (0000-0002-8381-0062, University of Zurich, corresponding author)
Year2019
Volume129
Issue618
Pages765-789
Publication date2019-02-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (OUP) (PUBLISHER)
DOI10.1111/ecoj.12569
OpenAlexW3124822465
LanguageEN
Citations received2
References cited25

© 2018 Royal Economic Society (Registered Charity No. 231508). We study the effects of the 1971 deregulation of UK banking on firms' financial and investment policies. The deregulation was a turning point in the evolution of firm-bank relationships during the twentieth century. Indeed, for more than 80 years prior to deregulation, most firms had had a relationship with only one bank: this was no longer the case from 1971 on. Deregulation and intensifying competition in the banking sector spurred firms - in local markets with many banks already active - to increase leverage and to invest more in research and development. Bank debt similarly expanded, while trade credit contracted. The Economic Journal

Banking industry · Business · Deregulation · Economics · Financial system · Leverage (statistics · Market economy · Banking stability, regulation, efficiency · Corporate Finance and Governance · Global Financial Crisis and Policies

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