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Who Benefits from Longer Lending Relationships? An Analysis on European SMEs

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  • Mariarosaria Agostino
  • Francesco Trivieri

Abstract

This paper empirically investigates the impact of lending relationships duration on SMEs financial stability. Our research hypothesis is that the balance between benefits and costs of longer bank‐firm ties may be different depending on the degree of firms' financial health. Using a large sample of European manufacturing SMEs that excludes firms that have defaulted and those with less than ten employees, we find that the overall positive effect of enduring lending relationships tends to progressively increase for more stable firms, being greater when the main bank operates nearby the firm. Our findings, yet, are conditional on firm survival and may not be generalized to the smallest of firms.

Suggested Citation

  • Mariarosaria Agostino & Francesco Trivieri, 2018. "Who Benefits from Longer Lending Relationships? An Analysis on European SMEs," Journal of Small Business Management, Taylor & Francis Journals, vol. 56(2), pages 274-293, April.
    • Handle: RePEc:taf:ujbmxx:v:56:y:2018:i:2:p:274-293
    DOI: 10.1111/jsbm.12257
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    Cited by:

    1. Mariarosaria Agostino & Lucia Errico & Sandro Rondinella & Francesco Trivieri, 2024. "Leverage and SMEs financial stability: the role of banking competition," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 48(2), pages 345-376, June.

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