Bank–firm relationships and allocative efficiency in Northeastern and Central Italy and in the South

Ferri, Giovanni; Messori, Marcello

doi:10.1016/s0378-4266(99)00118-1

Cited by 121 publications

(62 citation statements)

References 25 publications

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“…Finally, as expected, transactional lending is more frequent in richer provinces, where the soundness of the economic and socio-economic structure increases firms' transparency (Ferri and Messori, 2000).…”

Section: Control Variablessupporting

confidence: 68%

Competition and Relationship Lending: Friends or Foes?

Presbitero

Zazzaro

2009

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. (2005) and Degryse and Ongena (2007) document a Ushaped effect of market concentration on relationship lending which cannot be easily accommodated by the investment and strategic theories of relationship lending. In this paper, we suggest that this non-monotonicity can be explained by looking at the organizational structure of local credit markets. We provide evidence that marginal increases in interbank competition are detrimental to relationship lending in markets where large and out-of-market banks are predominant. On the contrary, where relational-based lending technologies are already widely in use in the market by a large group of small mutual banks, an increase in competition may drive banks to further cultivate their extensive ties with customers. Terms of use: Documents in EconStor mayJEL-Code: G21, L11.

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Section: Control Variablessupporting

confidence: 68%

Competition and Relationship Lending: Friends or Foes?

Presbitero

Zazzaro

2009

SSRN Journal

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“…The empirical evidence usually suggests that stronger relationships (with strength measured in various ways) are empirically associated with lower loan interest rates (e.g., Berger and Udell 1995, Harhoff and Körting 1998, Degryse and van Cayseele 2000 and greater smoothing of loan interest rates over the interest rate cycle (e.g., Berlin andMester 1999, Ferri andMessori 2000). 5 These studies were often unable to match the firms with their banks and local markets.…”

Section: White 2004)mentioning

confidence: 99%

Does market size structure affect competition? The case of small business lending

Berger¹,

Rosen²,

Udell³

2007

Journal of Banking & Finance

228

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Forthcoming, Journal of Banking and FinanceMarket size structure refers to the distribution of shares of different size classes of local market participants, where the sizes are inclusive of assets both within and outside the local market. We apply this new measure of market structure in two empirical analyses of the U.S. banking industry to address concerns regarding the effects of the consolidation in banking. Our quantity analysis of the likelihood that small businesses borrow from large versus small banks and our small business loan price analysis that includes market size structure as well as conventional measures yield very different findings from most of the literature on bank size and small business lending. Our results do not suggest a significant net advantage or disadvantage for large banks in small business lending overall, or in lending to informationally opaque small businesses in particular. We argue that the prior research that excluded market size structure may be misleading and offer some likely explanations of why our results differ. JEL Classification Numbers: G21, G28, G34, L11

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“…An alternative measure for the strength of the relationship used in previous empirical research is the exclusivity of the relationship (Petersen and Rajan, 1994;Ferri and Messori, 2000;Degryse and Van Cayseele, 2000;Berger et al, 2001;Ongena and Smith, 2001). If a financial institution operates as the main banker for a firm, the firm mostly communicates with this particular bank.…”

Section: H3: the Duration Of The Relationship Is Negatively Related Tmentioning

confidence: 99%

Business collateral and personal commitments in SME lending

Voordeckers

Steijvers

2006

Journal of Banking & Finance

152

103

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Using a database of SME credit approvals from a large Belgian bank, this paper extends the empirical evidence on the determinants of collateral by examining the determinants of business collateral simultaneously with the determinants of personal collateral/commitments. Our results suggest that firm and relationship characteristics seem to be more important determinants of collateral/commitment protection than loan and lender characteristics. Family firms are more likely to offer a higher degree of collateral/commitment protection while introducing competition between banks decreases this likelihood. The collateral requirement decreases in the length of the bank-borrower relationship. Furthermore, trade credit seems to have a signalling effect. The 'lazy banks hypothesis' was not supported. Our results suggest that beside risk arguments, also commercial arguments help explain the pledging of collateral. Using a continuation-ratio logit model, we discover several differences in the determinants of the collateralisation decision and the determinants of the type of collateral/commitments. JEL classification: M13; G21; G30; G32; C35Keywords: SME lending, business collateral, personal collateral, personal guarantees. Business collateral and personal commitments in SME lending. AbstractUsing a database of SME credit approvals from a large Belgian bank, this paper extends the empirical evidence on the determinants of collateral by examining the determinants of business collateral simultaneously with the determinants of personal collateral/commitments. Our results suggest that firm and relationship characteristics seem to be more important determinants of collateral/commitment protection than loan and lender characteristics. Family firms are more likely to offer a higher degree of collateral/commitment protection while introducing competition between banks decreases this likelihood. The collateral requirement decreases in the length of the bank-borrower relationship. Furthermore, trade credit seems to have a signalling effect. The 'lazy banks hypothesis' was not supported. Our results suggest that beside risk arguments, also commercial arguments help explain the pledging of collateral. Using a continuation-ratio logit model, we discover several differences in the determinants of the collateralisation decision and the determinants of the type of collateral/commitments. JEL classification: M13; G21; G30; G32; C35

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Bank–firm relationships and allocative efficiency in Northeastern and Central Italy and in the South

Cited by 121 publications

References 25 publications

Competition and Relationship Lending: Friends or Foes?

Competition and Relationship Lending: Friends or Foes?

Does market size structure affect competition? The case of small business lending

Business collateral and personal commitments in SME lending

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