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Consequences of firms'relational financing in the aftermath of the 1995 Mexican banking crisis

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Abstract

This paper shows that, in the aftermath of the 1995 banking crisis, relational financing was a two-edged sword for firms listed on the Mexican Securities Market. On the negative side, only bank-linked firms observed on average a dependence on cash stock to finance their investment projects. On the positive side, the banking connection was important to boost their profit rates during the 1997-2000 period, at least for financially healthy firms. These econometric results are derived from dynamic panel data models of investment and profit rates, which are estimated by the Generalized Method of Moments, where level and difference equations are combined into a system.

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  • Gonzalo Castañeda, 2005. "Consequences of firms'relational financing in the aftermath of the 1995 Mexican banking crisis," Journal of Applied Economics, Universidad del CEMA, vol. 8, pages 53-79, May.
    • Handle: RePEc:cem:jaecon:v:8:y:2005:n:1:p:53-79
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    Cited by:

    1. Karen Watkins & Dick Van Dijk & Jaap Spronk, 2006. "Corporate Governance and Performance during the Aftermath of the 1994 Mexican Crisis," EconoQuantum, Revista de Economia y Negocios, Universidad de Guadalajara, Centro Universitario de Ciencias Economico Administrativas, Departamento de Metodos Cuantitativos y Maestria en Economia., vol. 2(2), pages 35-48, Enero-Jun.

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    More about this item

    Keywords

    relational financing; banking crisis; internal capital markets;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • N26 - Economic History - - Financial Markets and Institutions - - - Latin America; Caribbean

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