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| Author: | Ghatak, M. Kali, R. |
| Title: | Financially interlinked business groups |
| Journal: | Journal of Economics & Management Strategy
2001 : WINTER, VOL. 10:4, p. 591-619 |
| Index terms: | Financial management Equity capital Debt financing Cross-sectional models |
| Language: | eng |
| Abstract: | Financial interlinkage, in form of cross-holding of equity and debt between firms,characterizes business groups in many countries. It is suggested in this article that such financial interlinksge can be viewed as a way to solve credit rationing caused by asymmetric information. If firms possess better information about each other than a bank, then business groups can be a mechanism to induce firms to sort on the basis of this information. |
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