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Credit Rationing, Customer Relationship and the Number of Banks: an Empirical Analysis

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  • Eric De Bodt
  • Frédéric Lobez
  • Jean‐Christophe Statnik

Abstract

The recent important transformations of the banking sector, especially through numerous mergers and acquisitions, both in Europe and in the USA, have raised serious concerns for the financing of small businesses (SBS). Indeed, SBS are known to be heavily dependent of this financing channel but to be rather opaque. It has long been thought that banks classically solved this problem by developing long term customer relationships. But will the new large banks, born from the current restructuring process, be able to continue to play this role? If not, what strategy should SBS develop to compose their bank pool in order to avoid, as much as possible, credit rationing? These questions are at the heart of our analysis. We show that there is no unique rule: all depends on the degree of SBS opacity and the kind of bank the SBS are working with.

Suggested Citation

  • Eric De Bodt & Frédéric Lobez & Jean‐Christophe Statnik, 2005. "Credit Rationing, Customer Relationship and the Number of Banks: an Empirical Analysis," European Financial Management, European Financial Management Association, vol. 11(2), pages 195-228, March.
    • Handle: RePEc:bla:eufman:v:11:y:2005:i:2:p:195-228
    DOI: 10.1111/j.1354-7798.2005.00282.x
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    References listed on IDEAS

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    1. Emilia Bonaccorsi di Patti & Giorgio Gobbi, 2001. "The Effects of Bank Consolidation and Market Entry on Small Business Lending," Temi di discussione (Economic working papers) 404, Bank of Italy, Economic Research and International Relations Area.
    2. Berger, Allen N. & Miller, Nathan H. & Petersen, Mitchell A. & Rajan, Raghuram G. & Stein, Jeremy C., 2005. "Does function follow organizational form? Evidence from the lending practices of large and small banks," Journal of Financial Economics, Elsevier, vol. 76(2), pages 237-269, May.
    3. Arturo Bris & Ivo Welch, 2005. "The Optimal Concentration of Creditors," Journal of Finance, American Finance Association, vol. 60(5), pages 2193-2212, October.
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