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Credit rationing and relationship lending. Does firm size matter?

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  • Cenni, Stefano
  • Monferrà, Stefano
  • Salotti, Valentina
  • Sangiorgi, Marco
  • Torluccio, Giuseppe

Abstract

Using survey based data, we investigate factors influencing credit rationing within a bank-based financial system. We show that rationing depends on various dimensions of the firm-bank relationships and that the effects of relationship lending on rationing are not identical for different firm size groups. Multiple-banking increases the probability of rationing for small and large firms. Debt concentration with the main bank affects positively smaller firms, while the opposite is true for large companies. The length of the relationship with the main bank decreases the probability of rationing for both groups, but more so for large firms endowed with more bargaining power. Finally, the firm-bank spatial proximity, measured by the headquarters’ vicinity, does not affect the firm’s access to credit.

Suggested Citation

  • Cenni, Stefano & Monferrà, Stefano & Salotti, Valentina & Sangiorgi, Marco & Torluccio, Giuseppe, 2015. "Credit rationing and relationship lending. Does firm size matter?," Journal of Banking & Finance, Elsevier, vol. 53(C), pages 249-265.
    • Handle: RePEc:eee:jbfina:v:53:y:2015:i:c:p:249-265
    DOI: 10.1016/j.jbankfin.2014.12.010
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    More about this item

    Keywords

    Credit rationing; Relationship banking; SME; Firm financing; Probit sample selection models;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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