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The Benefits of Concurrent Bank Lending and Investing via Bank-affiliated Venture Capital

Author

Listed:
  • Konishi, Masaru
  • 小西, 大
  • Suzuki, Katsushi

Abstract

Using Japanese IPOs, this paper empirically examines the roles that bank-affiliated venture capital firms play in mitigating information asymmetries that are detrimental in small business lending. We find that concurrent bank lending and investing via venture capital subsidiaries benefits firms by increasing credit availability, particularly by increasing the availability of long-term loans, but not by lowering interest rates. We also find that banks that jointly deliver lending and investment via VC subsidiaries build close ties with firms. These results suggest that strong bank-firm relationships, which benefit firms by availability of credit, can be built through scope of relationships.

Suggested Citation

  • Konishi, Masaru & 小西, 大 & Suzuki, Katsushi, 2007. "The Benefits of Concurrent Bank Lending and Investing via Bank-affiliated Venture Capital," Hitotsubashi Journal of commerce and management, Hitotsubashi University, vol. 41(1), pages 19-36, October.
    • Handle: RePEc:hit:hitjcm:v:41:y:2007:i:1:p:19-36
    DOI: 10.15057/14620
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    File URL: https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/14620/HJcom0410100190.pdf
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    Cited by:

    1. Keiichiro Koda & Kazuo Yamada, 2018. "Determinants of Underwriting Fees by New Entrant Banks: Evidence from the Japanese IPO Underwriting Market," Financial Management, Financial Management Association International, vol. 47(2), pages 285-307, June.

    More about this item

    Keywords

    Venture capital; Capital structure; Relationship lending; Japanese finance;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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