Bank Relationships and Their Effects on Firm Performance Around the Asian Financial Crisis: Evidence from Taiwan

24 Pages Posted: 6 Jan 2005

See all articles by Robert (Chi-Wing) Fok

Robert (Chi-Wing) Fok

University of Wisconsin - Parkside

Yuan-Chen Chang

National Chung Hsing University; Lancaster University

Wan-Tuz Lee

National Chung Cheng University

Abstract

We evaluate the impact of bank relationships on firm performance for a sample of Taiwanese firms around the 1997 Asian financial crisis. We find a negative relation between the number of domestic-bank relationships and firm performance, but a positive relation between the number of foreign-bank relationships and firm performance. Firms explored new relationships with domestic banks and reduced their reliance on foreign banks during the crisis. Lending bank reputation and bank loan ratios are important factors explaining firm performance. Factors that affect banking relationships include borrowing firms' profitability, age, size, and leverage, and the primary lending bank's characteristics.

Suggested Citation

Fok, Robert (Chi-Wing) and Chang, Yuan-Chen and Lee, Wan-Tuz, Bank Relationships and Their Effects on Firm Performance Around the Asian Financial Crisis: Evidence from Taiwan. Available at SSRN: https://ssrn.com/abstract=552202

Robert (Chi-Wing) Fok (Contact Author)

University of Wisconsin - Parkside

900 Wood Road
P.O. Box 2000
Kenosha, WI 53141-2000
United States

Yuan-Chen Chang

National Chung Hsing University ( email )

402, No. 250 Kuo Kuang Road, Taiwan
Taichung, Taiwan
China

Lancaster University ( email )

Lancaster LA1 4YF
United Kingdom

Wan-Tuz Lee

National Chung Cheng University ( email )

Min-Shiung, Chia-Yi, 621
Taiwan

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