Chapter

Universal Banks and Relationships with Firms

Ralf Elsas and Jan P. Krahnen

in The German Financial System

Published in print March 2004 | ISBN: 9780199253166
Published online January 2005 | e-ISBN: 9780191601651 | DOI: http://dx.doi.org/10.1093/0199253161.003.0007
 Universal Banks and Relationships with Firms

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Reviews recent empirical evidence regarding the special role of banks for the corporate governance of German firms (hausbank-relationships). We differentiate between the role of banks as monitors and financiers of large, exchange-listed firms and of smaller, non-listed firms. Sub-sections of the chapter deal with direct shareholdings, proxy-voting rights, supervisory board representation, debt financing, and distress resolution. The accumulated evidence supports the idea that relationship lending plays a distinctive role in German firms’ corporate governance, and will continue to influence the future development of the financial system.

Keywords: corporate governance; debt financing; house-bank/hausbank; proxy-voting; relationship lending; shareholdings; supervisory board

Chapter.  15654 words.  Illustrated.

Subjects: Financial Markets

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