A Century of Firm-Bank Relationships : Why the Transition to Multiple Banking?

We study how relationships between firms and banks evolved between during the Twentieth century in Britain. We document and explain a remarkable transition from single to multiple firm-bank relationships during the last twenty years of the sample period. Larger, global, or transparent companies with greater needs for bank credit and specialized services are more likely to add a bank. Deregulation and intensifying competition in the banking sector during the 1970s spurred banks to supply credit and services through these multilateral arrangements. Firm size, geographical presence, leverage, and control determine whether a clearer bank, another British bank or a foreign bank is added