Bank Risk and Firm Investment: Evidence from Firm-Level Data

TY - JOUR

T1 - Bank Risk and Firm Investment

T2 - Evidence from Firm-Level Data

AU - Shamshur, Anastasiya

AU - Weill, Laurent

N1 - Funding Information: No funds, grants, or other support was received. Publisher Copyright: © 2022, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.

PY - 2022/3/5

Y1 - 2022/3/5

N2 - Is higher bank risk-taking associated with more firm investment? Combining firm- and bank-level data, we examine the relation between bank risk and firm investment in a large sample of firms from nine European countries. We find that bank risk is positively associated with firm investment. Our finding accords with the modern theory of financial intermediation: risk taking by banks enhances firm investment as banks become more willing to perform their key function in the economy. Additionally, we also find that this positive relation is stronger for financially-constrained firms and when banks are more efficient.

AB - Is higher bank risk-taking associated with more firm investment? Combining firm- and bank-level data, we examine the relation between bank risk and firm investment in a large sample of firms from nine European countries. We find that bank risk is positively associated with firm investment. Our finding accords with the modern theory of financial intermediation: risk taking by banks enhances firm investment as banks become more willing to perform their key function in the economy. Additionally, we also find that this positive relation is stronger for financially-constrained firms and when banks are more efficient.

KW - Bank risk

KW - Firm investment

UR - http://www.scopus.com/inward/record.url?scp=85125746832&partnerID=8YFLogxK

U2 - 10.1007/s10693-022-00379-y

DO - 10.1007/s10693-022-00379-y

M3 - Article

AN - SCOPUS:85125746832

SN - 0920-8550

JO - JOURNAL OF FINANCIAL SERVICES RESEARCH

JF - JOURNAL OF FINANCIAL SERVICES RESEARCH

ER -