Speaker：Dr ZHANG Min(School of Business，Renmin University of China)

Time：9:30-11:00 April 28,2017(Friday)

Site：B247

Abstract：Using data of Chinese listed firms, we find that firms that purchase financial products from a bank are more likely (with the probability being 157 and 171 times higher for the three-year window and one-year window respectively)to obtain loans from the bank than those that do not buy. This result seems counter-intuitive. We argue that the nature of this seemingly contradictory phenomenon is investment in far-reaching relational capital which is characterized by information advantage or interest complementarity. Through this relationship, firms can get preferential treatments, better access to loans in particular, from their relationship banks. We further find that this phenomenon is less pronounced for the state-owned enterprise borrowers and state-owned banks(SOE-SOB) pairs and more salient for firms of low risk.