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Reduction In Information Asymmetry And Credit Access For Small And Medium-Sized Enterprises

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  • Andrea Moro
  • Matthias Fink
  • Daniela Maresch

Abstract

type="main" xml:lang="en"> We examine the relation between the quality, quantity, completeness, and timeliness of the information loan managers obtain from small and medium-sized enterprises (SMEs) and the amount of short-term credit provided to them by looking at 828 loan–manager–SME relationships in Italy. The result suggests that a reduction in information asymmetry is associated with a greater amount of credit. Moreover, the reduction in information asymmetry has a relevant economic impact on the amount of short-term credit obtained: the amount of credit provided increases by 12% when asymmetry reduces by one notch. Our results are robust to alternative specifications and to endogeneity.

Suggested Citation

  • Andrea Moro & Matthias Fink & Daniela Maresch, 2015. "Reduction In Information Asymmetry And Credit Access For Small And Medium-Sized Enterprises," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 38(1), pages 121-143, March.
    • Handle: RePEc:bla:jfnres:v:38:y:2015:i:1:p:121-143
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    Cited by:

    1. Moro, Andrea & Maresch, Daniela & Fink, Matthias & Ferrando, Annalisa & Piga, Claudio, 2020. "Spillover effects of government initiatives fostering entrepreneurship on the access to bank credit for entrepreneurial firms in Europe," Journal of Corporate Finance, Elsevier, vol. 62(C).
    2. Maurizio Massaro & Andrea Moro & Ewald Aschauer & Matthias Fink, 2019. "Trust, control and knowledge transfer in small business networks," Review of Managerial Science, Springer, vol. 13(2), pages 267-301, April.
    3. Nilba Feijó-Cuenca & Nuria Ceular-Villamandos & Virginia Navajas-Romero, 2023. "Behavioral Patterns That Influence the Financing Choice Models of Small Enterprises in Ecuador through Latent Class Analysis," Sustainability, MDPI, vol. 15(8), pages 1-17, April.
    4. Moro, Andrea & Wisniewski, Tomasz Piotr & Mantovani, Guido Massimiliano, 2017. "Does a manager's gender matter when accessing credit? Evidence from European data," Journal of Banking & Finance, Elsevier, vol. 80(C), pages 119-134.
    5. Marcello Pagnini & Paola Rossi & Valerio Vacca & Lucia dalla Pellegrina & Serena Frazzoni & Zeno Rotondi & Andrea Vezzulli, 2017. "Access to Credit for Small Innovative Businesses," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 46(3), pages 411-458, November.
    6. Wellalage, Nirosha Hewa & Reddy, Krishna, 2020. "Determinants of profit reinvestment undertaken by SMEs in the small island countries," Global Finance Journal, Elsevier, vol. 43(C).
    7. Kallandranis, Christos & Anastasiou, Dimitrios & Drakos, Konstantinos, 2023. "Credit rationing prevalence for Eurozone firms," Journal of Business Research, Elsevier, vol. 158(C).
    8. Radeef Chundakkadan & Subash Sasidharan, 2022. "Gender gap and access to finance: A cross‐country analysis," Review of Development Economics, Wiley Blackwell, vol. 26(1), pages 180-207, February.
    9. Estefanía Palazuelos & Ángel Herrero Crespo & Javier Montoya Corte, 2018. "Accounting information quality and trust as determinants of credit granting to SMEs: the role of external audit," Small Business Economics, Springer, vol. 51(4), pages 861-877, December.
    10. Lucia Dalla Pellegrina & Serena Frazzoni & Zeno Rotondi & Andrea Vezzulli, 2017. "Does ICT adoption improve access to credit for small enterprises?," Small Business Economics, Springer, vol. 48(3), pages 657-679, March.
    11. Ying Tang & Andrea Moro & Sandro Sozzo & Zhiyong Li, 2018. "Modelling trust evolution within small business lending relationships," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 4(1), pages 1-18, December.
    12. Farah Saerens & Stefanie Ceustermans, 2021. "Abbreviated or Micro-Entity Accounts? Effect of Financial Reporting Format on the Availability of Trade Credit," Sustainability, MDPI, vol. 13(15), pages 1-18, July.
    13. Lakshmi, Geeta & Tilley, Simon, 2019. "The “power” of community renewable energy enterprises: The case of Sustainable Hockerton Ltd," Energy Policy, Elsevier, vol. 129(C), pages 787-795.
    14. Mushtaq, Rizwan & Gull, Ammar Ali & Usman, Muhammad, 2022. "ICT adoption, innovation, and SMEs’ access to finance," Telecommunications Policy, Elsevier, vol. 46(3).
    15. Danilo V. Mascia, 2018. "Young Enterprises and Bank Credit Denials," Working Papers id:12814, eSocialSciences.
    16. Mascia, Danilo V. & Rossi, Stefania P.S., 2017. "Is there a gender effect on the cost of bank financing?," Journal of Financial Stability, Elsevier, vol. 31(C), pages 136-153.
    17. Gartner, Johannes & Fink, Matthias & Floh, Arne & Eggers, Fabian, 2021. "Service quality in social media communication of NPOs: The moderating effect of channel choice," Journal of Business Research, Elsevier, vol. 137(C), pages 579-587.
    18. Estefanía Palazuelos & Ángel Herrero Crespo & Javier Montoya del Corte, 2018. "Effect of perceived default risk and accounting information quality on the decision to grant credit to SMEs," Risk Management, Palgrave Macmillan, vol. 20(2), pages 121-141, May.
    19. Mascia, Danilo V., 2018. "Young Enterprises and Bank Credit Denials," ADBI Working Papers 844, Asian Development Bank Institute.
    20. Tang, Ying & Moro, Andrea, 2020. "Trade credit in China: Exploring the link between short term debt and payables," Pacific-Basin Finance Journal, Elsevier, vol. 59(C).
    21. Nitani, Miwako & Legendre, Nicolas, 2021. "Cooperative lenders and the performance of small business loans," Journal of Banking & Finance, Elsevier, vol. 128(C).
    22. Moro, Andrea & Belghitar, Yacine & Mateus, Cesario, 2021. "National culture and small firms' use of trade credit: Evidence from Europe," Global Finance Journal, Elsevier, vol. 49(C).
    23. Mihaela MATEI & Mihaela IORDACHE, 2020. "Increasing Entrepreneurship In Romania Through European Structural Funds And Emigration," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 14(1), pages 561-571, November.

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