Leverage and Firm-Bank Relationships

Fabio Braggion and Steven Ongena have a post at Vox which looks at corporate leverage and firm-bank relationships in the UK from 1895 to 2009. They document an increase in corporate leverage from c.1970 and a simultaneous increase in firms having multiple relationships with banks. Braggion and Ongena argue that the increase in leverage can be traced to the deregulation of the UK banking system in the early 1970s and the breaking up of the banking cartel. Their working paper is available here.

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