The Effect of Credit Market Competition on Lending Relationships

@inproceedings{Petersen1994TheEO,
  title={The Effect of Credit Market Competition on Lending Relationships},
  author={M. Petersen and R. Rajan},
  year={1994}
}
  • M. Petersen, R. Rajan
  • Published 1994
  • Economics, Business
  • This paper provides a simple model showing that the extent of competition in credit markets is important in determining the value of lending relationships. Creditors are more likely to finance credit constrained firms when credit markets are concentrated because it is easier for these creditors to internalize the benefits of assisting the firms. The model has implications about the availability and the price of credit as firms age in different markets. The paper offers evidence for these… CONTINUE READING
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