Strieborny, M. and Kukenova, M. (2016) Investment in relationship-specific assets: does finance matter? Review of Finance, 20(4), pp. 1487-1515. (doi: 10.1093/rof/rfv049)
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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 twenty-eight industries in ninety 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.
| Item Type: | Articles |
|---|---|
| Status: | Published |
| Refereed: | Yes |
| Glasgow Author(s) Enlighten ID: | Strieborny, Dr Martin |
| Authors: | Strieborny, M., and Kukenova, M. |
| College/School: | College of Social Sciences > Adam Smith Business School > Accounting and Finance |
| Journal Name: | Review of Finance |
| Publisher: | Oxford University Press |
| ISSN: | 1572-3097 |
| ISSN (Online): | 1573-692X |
| Published Online: | 22 October 2015 |
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