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Nowhere Else to Go: The Determinants of Bank-Firm Relationship Discontinuations after Bank Mergers

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  • Oliver Rehbein
  • Santiago Carbo-Valverde

Abstract

The decision to change or terminate a bank-firm relationship has been demonstrated to be crucial to firm performance following bank mergers. We investigate what determines this decision and find both bank competition and the available firm collateral to be important factors. We additionally provide new evidence that firms that are able to add a bank rela- tionship following a merger exhibit much stronger post-merger performance. Our findings are consistent with the interpretation that bank mergers cause a reduction in lending to most firms, leading them to search for alternative sources of finance.

Suggested Citation

  • Oliver Rehbein & Santiago Carbo-Valverde, 2020. "Nowhere Else to Go: The Determinants of Bank-Firm Relationship Discontinuations after Bank Mergers," CRC TR 224 Discussion Paper Series crctr224_2018_044v2, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2018_044v2
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    More about this item

    Keywords

    bank mergers; relationship banking; competition;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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