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Bank lending technologies and credit availability in Europe. What can we learn from the crisis?

Author

Listed:
  • Giovanni Ferri

    (LUMSA University)

  • Pierluigi Murro

    (LUISS University)

  • Valentina Peruzzi

    (University of Trento)

  • Zeno Rotondi

    (UniCredit Bank)

Abstract

Using a unique sample of European manufacturing firms, we empirically investigate how bank lending technologies and soft information production affected firms' credit availability during the 2007-2009 financial crisis. Estimation results indicate that transactional lending technologies increased firms' credit rationing, whereas soft information production mitigated asymmetric information problems and improved firms' access to credit. By looking at the combined effect of lending technologies and soft information, we also provide evidence of the hardening of soft information phenomenon. When soft information was incorporated in transactional lending techniques firms' credit rationing significantly reduced. This result is especially strong for small borrowing firms and for companies matching with large financial insitutions.

Suggested Citation

  • Giovanni Ferri & Pierluigi Murro & Valentina Peruzzi & Zeno Rotondi, 2018. "Bank lending technologies and credit availability in Europe. What can we learn from the crisis?," CERBE Working Papers wpC17, CERBE Center for Relationship Banking and Economics.
    • Handle: RePEc:lsa:wpaper:wpc17
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    More about this item

    Keywords

    Lending technologies; Credit rationing; Financial crisis; Soft information;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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