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Do Firms Benefit from Concentrating their Borrowing? Evidence from the Great Recession

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  • Giorgio Gobbi
  • Enrico Sette

Abstract

We investigate whether the extent to which firms concentrate their borrowing from banks mitigates the credit contraction that followed the default of Lehman. Using micro data from a large sample of Italian firms, we show that firms borrowing from fewer banks and those with more concentrated borrowing suffer on average a smaller contraction in bank credit and have a lower probability of being credit-rationed. The results hold controlling for several firm-level characteristics and for the possible endogeneity of the measures of concentration of borrowing.

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  • Giorgio Gobbi & Enrico Sette, 2014. "Do Firms Benefit from Concentrating their Borrowing? Evidence from the Great Recession," Review of Finance, European Finance Association, vol. 18(2), pages 527-560.
    • Handle: RePEc:oup:revfin:v:18:y:2014:i:2:p:527-560.
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    File URL: http://hdl.handle.net/10.1093/rof/rft017
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