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The importance of bank seniority for relationship lending

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The authors examine two aspects of a bank's interaction with its borrowers--the relative priority of bank debt and the role of banks as \"relationship lenders.\" They show that making the bank senior improves its incentives to build a relationship with the firm, thereby fulfilling an important function of intermediated debt.

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  • Stanley D. Longhofer & João A. C. Santos, 1998. "The importance of bank seniority for relationship lending," Working Papers (Old Series) 9808, Federal Reserve Bank of Cleveland.
    • Handle: RePEc:fip:fedcwp:9808
    DOI: 10.26509/frbc-wp-199808
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