Marketing Business Weekly
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Credit and Banking
Research data from Stony Brook update understanding of credit and banking
August 22nd, 2010
According to recent research from the United States, "A growing literature investigates the role of internal capital markets in mitigating financial constraints faced by the subsidiaries of a conglomerate. Most studies have relied on indirect tests based on correlations between the cash flows and the investment of the subsidiaries."
"In contrast, we avoid the widespread criticisms of such specifications by providing direct tests that focus on the mechanisms through which internal reallocations of funds occur. We find that internal capital markets are used by multibank holding companies to mitigate capital constraints faced by individual bank subsidiaries. In addition, we...
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Source: Marketing Business Weekly (2010-08-22)