Universal Banking,Conflicts of Interest and Firm Growth |
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| Authors: | Lili Xie |
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| Affiliation: | (1) Department of Economics WB201, Ball State University, Muncie, IN 47306, USA |
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| Abstract: | ![]()
This paper studies the relationship between universal banking and firm performance. With 40 developing and developed countries, I find that the overall effect of universal banking on firm growth is negative. This suggests that the negative effect of conflicts of interest dominates the positive effect of economies of scale and scope in universal banking. However, in countries with stronger protection of creditors’ rights and higher information efficiency, conflicts of interest are less likely and the negative relationship between universal banking and firm growth is significantly weaker. |
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| Keywords: | Universal banking firm incentive conflicts of interest economies of scope economies of scale |
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