Banks benefit more in bank-firm relationships
The benefits of bank involvement in firms' governance accrue mostly to the banks, new research from the European Central Bank posits.
The research also shows that banks lend more to firms to which they have governance links. The research further finds that banks charge higher interest-rate spreads without significantly relaxing other loan terms to firms in which the have control. The analysis shows that the presence of a banker on the firm's board of directors on average results in a spread
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