TY - JOUR TI - Financial claims and product market competition: An explanation for permitting banks to hold equity in firms AU - Pao Shin-Heng AU - Lin Jyh-Horng JN - Yugoslav Journal of Operations Research PY - 2008 VL - 18 IS - 2 SP - 235 EP - 251 PT- Article AB- This paper examines financial claims for lending if banks are permitted to hold equity in productive firms. We demonstrate that in situations where an oligopolistic product market has relatively high competition, e.g., quasi-competitive behavior, equity holding by banks is likely to do little damage. However, where the product market has relatively high collusion, e.g., corporative behavior, equity holding by banks are very unlikely to hold equity in firms. Our findings provide an alternative argument that lifting the Glass-Steagall Act restricting banks from holding equity in firms should give little cause for concern.