The strength of bank-firm ties: how direct and indirect board connections affect debt financing

Borsa Istanbul Review. 2026. Vol. 26. No. 2. Article 100777.

Kirpishchikov D., Zavertiaeva M. A., Shenkman E.

This study examines how both direct and indirect links to banks, formed through board members' professional connections, affect a firm's access to debt financing. We develop a Cross-Node Proximity metric that identifies the shortest and strongest path from a firm to a bank via board interlocks, and we calculate it using a dataset of large Russian listed firms and Russian banks. Our findings, derived from an endogenous switching regression model, reveal that both the direct inclusion of bankers on boards and indirect connections significantly influence access to long-term financing. Moreover, connections to systemically important banks are as valuable as those to other banks. This research extends existing studies on bank-firm linkages by highlighting the importance of indirect connections. We provide empirical support for the resource-based view by showing how bank directors' expertise can spread through interlocking directorships.

Keywords: financial resources, knowledge diffusion, interlocking directorates, Bank-firm ties, board networks