Collective Relationship Banking and Private Information Monitoring in Korea

CCP Working Paper No. 06-2

35 Pages Posted: 28 Jun 2006

See all articles by Yoonhee Tina Chang

Yoonhee Tina Chang

University of Bath - School of Management

Date Written: October 2005

Abstract

The structure of conglomerates embedded in the strong vertical ownership network in East Asia was believed to be a driving force for the economic success but was also blamed for the recent financial crisis in Asia given the fallacy - too big to collapse. This paper introduces a notion of collective relationship banking (CRB) as a mechanism for monitoring private information and investigates the likelihood of such a banking relationship when the borrowing firms have a heterogenous vertical ownership structure using a Korean firm level panel dataset. Policy concerns are then addressed since the post-crisis corporate restructuring may create a more concentrated banking relationship with a few dominant banks.

Keywords: Collective relationship banking, vertical ownership, information monitoring, relation-based governance

JEL Classification: G21, G28, L13, L59

Suggested Citation

Chang, Yoonhee Tina, Collective Relationship Banking and Private Information Monitoring in Korea (October 2005). CCP Working Paper No. 06-2, Available at SSRN: https://ssrn.com/abstract=911599 or http://dx.doi.org/10.2139/ssrn.911599

Yoonhee Tina Chang (Contact Author)

University of Bath - School of Management ( email )

Bath, Avon BA2 7AY
United Kingdom
+44 (0)1225 383744 (Phone)

HOME PAGE: http://people.bath.ac.uk/ytc23