Journal ArticleDOI
What's different about banks?☆
TLDR
The reserve tax on CD's is borne by bank borrowers as discussed by the authors, and it is assumed that bank borrowers are willing to pay higher interest rates than those on other securities of equivalent risk.About:
This article is published in Journal of Monetary Economics.The article was published on 1985-01-01. It has received 2364 citations till now. The article focuses on the topics: Interest rate & Certificate of deposit.read more
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Financial Dependence and Growth
Raghuram G. Rajan,Raghuram G. Rajan,Raghuram G. Rajan,Luigi Zingales,Luigi Zingales,Luigi Zingales +5 more
TL;DR: This paper examined whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship; that financial development reduces the costs of external finance to firms, and found that industrial sectors that are relatively more in need of foreign finance develop disproportionately faster in countries with more developed financial markets.
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The Benefits of Lending Relationships: Evidence from Small Business Data
TL;DR: In this article, the authors empirically examined how ties between a firm and its creditors affect the availability and cost of funds to the firm and found that the primary benefit of building close ties with an institutional creditor is that the availability of financing increases.
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INSIDERS AND OUTSIDERS: The Choice between Informed and Arm's-length Debt
TL;DR: In this paper, the authors argue that while informed banks make flexible financial decisions which prevent a firm's projects from going awry, the cost of this credit is that banks have bargaining power over the firm's profits, once projects have begun.
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Asymmetric Information, Bank Lending, and Implicit Contracts: A Stylized Model of Customer Relationships
TL;DR: In this article, a dynamic theory of "customer relationships" in bank loan markets is presented, based on a traditional view of bank lending behavior, first spelled out by Hodgman and Kane and Malkiel (1965) and later elaborated upon by Wood (1975).
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Embeddedness in the making of financial capital : How social relations and networks benefit firms seeking financing
TL;DR: In this article, the authors investigated how social embeddedness affects an organization's acquisition and cost of financial capital in middle-market banking and developed a framework to explain how embeddedness can influence which firms get capital and at what cost.
References
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Theory of the firm: Managerial behavior, agency costs and ownership structure
TL;DR: In this article, the authors draw on recent progress in the theory of property rights, agency, and finance to develop a theory of ownership structure for the firm, which casts new light on and has implications for a variety of issues in the professional and popular literature.
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Separation of ownership and control
Eugene F. Fama,Michael C. Jensen +1 more
TL;DR: The authors argue that the separation of decision and risk-bearing functions observed in large corporations is common to other organizations such as large professional partnerships, financial mutuals, and nonprofits. But they do not consider the role of decision agents in these organizations.
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Bank Runs, Deposit Insurance, and Liquidity
TL;DR: The authors showed that bank deposit contracts can provide allocations superior to those of exchange markets, offering an explanation of how banks subject to runs can attract deposits, and showed that there are circumstances when government provision of deposit insurance can produce superior contracts.
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Informational asymmetries, financial structure, and financial intermediation
TL;DR: This paper argued that the average quality is likely to be low, with the consequence that even projects which are known (by the entrepreneur) to merit financing cannot be undertaken because of the high cost of capital resulting from low average project quality.
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Agency Problems and Residual Claims
Eugene F. Fama,Michael C. Jensen +1 more
TL;DR: Jensen and Fama as mentioned in this paper developed a set of propositions that explaim the special features of the residual claims of different organizational forms as efficient approaches to controlling agency problems and explained the survival of organizational forms in specific activities.