Graduate School of Business Administration, University of Florida, Gainesville. Thanks to David Marcus and Ebru Tan for research assistance. Thanks to John Boyd, David Brown, Mark Flannery, Glenn Hubbard, Mitch Petersen, René Stulz, an anonymous referee, workshop participants at The Federal Reserve Board of Governors, Michigan State University, University of Michigan, Northwestern University, participants in the conference on designing Banking Systems in Milan, Italy, and the JFI symposium for helpful comments.
Bank Information Monopolies and the Mix of Private and Public Debt Claims
Article first published online: 30 APR 2012
1996 The American Finance Association
The Journal of Finance
Volume 51, Issue 5, pages 1863–1889, December 1996
How to Cite
HOUSTON, J. and JAMES, C. (1996), Bank Information Monopolies and the Mix of Private and Public Debt Claims. The Journal of Finance, 51: 1863–1889. doi: 10.1111/j.1540-6261.1996.tb05229.x
- Issue published online: 30 APR 2012
- Article first published online: 30 APR 2012
This article examines the determinants of the mix of private and public debt using detailed information on the debt structure of 250 publicly traded corporations from 1980 through 1990. We find that the relationship between bank borrowing and the importance of growth opportunities depends on the number of banks the firm uses and whether the firm has public debt outstanding. For firms with a single bank relationship, the reliance on bank debt is negatively related to the importance of growth opportunities. In contrast, among firms borrowing from multiple banks, the relationship is positive.