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Firm–bank “odd couples” and trade credit: Evidence from Italian small- and medium-sized enterprises

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  • Bertrand, Jérémie
  • Murro, Pierluigi

Abstract

One of the most crucial obstacles for small- and medium-sized enterprises is access to credit primarily because of their high opacity. The existing literature underlines that relationship banks specialize in analyzing opaque firms, thereby allowing them better access to credit; however, what can opaque firms do if they cannot find a relationship bank? By using an Italian database, with more than 900 firms, we reveal that when opaque firms deal with transactional banks (the “odd couples”), they use a greater portion of trade credit. This result is robust to alternative measures of trade credit and lending technologies. We further analyze the mechanisms driving the association between odd couples and trade credit use. Regression results suggest that the positive association is particularly significant for firms with more market power, not “captured” by their primary bank, and located in areas with high levels of social capital.

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  • Bertrand, Jérémie & Murro, Pierluigi, 2022. "Firm–bank “odd couples” and trade credit: Evidence from Italian small- and medium-sized enterprises," Economic Modelling, Elsevier, vol. 111(C).
    • Handle: RePEc:eee:ecmode:v:111:y:2022:i:c:s026499932200075x
    DOI: 10.1016/j.econmod.2022.105829
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    More about this item

    Keywords

    Banks; Lending technologies; Small business; Trade credit;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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