Relational Financing Research

With the development of the theory of financial intermediation and financial system, people have known more about the investing and financing mode. Under the paradigm of asymmetric information, the difference between the traditional direct investment and indirect investment is too rough, and many complex phenomena can not be interpreted. Moreover, financial system is divided into bank-based and market-based system following the above logic, but it can not show the internal mechanism of action and institutional system of financial system.In the viewpoint of this dissertation, the essential dissimilarity between different financing patterns does not lie in direct or indirect investment, but lies in the distinction of their function to the way of information production and the coiporate governing structure. On the public financial market, the market is an efficient mechanism of adding information. Due to dispersion of investors, firms should be obliged to announce the qualified internal information in order to improve the efficiency of information production and avoid the lack of information production which is caused by free-ride. After the information is handled directly or indirectly with low cost by investors, the particular market reputation is established, which can reduce the cost to sign and perform the credit contract through a competitive pricing mechanism and a standardized contracting system. But the rigid announcement of internal information not only raises the working cost of firms, but also adds the business risk; on the other hand, the contractual features of public financing limit the flexibility of contract executing. When the new information appears or information goes to be complete, the former optimal contract may become a suboptimal one because of imperfection of information, then discretion has value. But in the private financing, the problem of free ride does not exist because of few investors, so financing is relationship-based, not arm's-length. During the process of relationship financing, investors get information through providing screening and monitoring services, not depending on the service provided by the third part. The information can be reused in the multiple interaction process with the same client under the confident condition, so banks can benefit from the intertemporal reuse of information. Relationship financing leaves room for flexibility and discretion in contract that permits the utilization of subtle, noncontractable information, thereby facilitating implicit long term contracting, and reducing the probability of financial crisis.The role played by the outside financier in the corporate governance is corresponding to the method of information production. In the public market financing, the marginal cost ofABSTRACTsolely producing of private information by investors is very high, and at the same tine, the information announcement must be published. These difficulties make outside financiers have no enough ability and aspiration to participate in the inner governance of the corporate directly, and only can offer the exterior restriction for the corporate governor through the contract terms and the corporate property market. But in the relationship lending arrangement, the close relationship between investors and financiers make outside investors play more active role in corporate governance.This dissertation studies the essential characteristics of relationship financing based on the information production, and makes comparative institutional studies on macro basis.This dissertation comprises six chapters excluding introduction following the whole framework.Chapter 1 analyses the internal links between the theory of relationship financing and the theory of financial intermediation, emphasizes the importance of information production such as screening, delegated monitoring under the paradigm of asymmetric information, and indicates the core competitive power which relationship investors have in the framework of scale economy and scope economy.Chapter II focus...