Agency Cost of Debt and Credit Market Competition: a Bargaining Approach

نویسندگان

  • Erkki Koskela
  • Rune Stenbacka
چکیده

This paper studies the effect of credit market competition, measured by the bargaining power of banks, on the agency costs of debt finance. The threshold of obtaining loan finance is shown to be independent of the relative bargaining power of the financier, while intensified credit market competition leads to lower lending rates and investment return distributions with lower, but less risky returns. Thus, our analysis does not support the view that there would be a trade-off between more intensive credit market competition and higher agency costs of debt finance.

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تاریخ انتشار 2002