Learning from crisis: Relational capital in lending relationships: Evidence from European family firms

Marco Cucculelli, Valentina Peruzzi and Alberto Zazzaro ()

No 128, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences

Abstract: In this paper we empirically investigate the effects of active family involvement in the company.s management on bank-firm lending relationships and access to credit. Based on the trade-off between relational and management human capital, we explore whether the relational capital embodied in the family leadership of the company influences the lending relationships with the main bank in terms of information sensitivity and duration. Then, we test whether family firms with family CEOs are more likely to experience a credit restriction from banks than family firms appointing professional CEOs external to the family. Results indicate that family businesses appointing family managers are significantly more likely to maintain soft-information-based and longer-lasting lending relationships. However, having family executives does not have a negative impact on firm.s access to credit, while the creation of soft-information-based and long-lasting lending relationships significantly reduces the likelihood of experiencing credit restrictions. In view of these findings, family relational capital seems to have a univocal beneficial impact on bank-firm relationship in our sample.

Keywords: Family firm; family CEO; soft-information; relational capital; relationship lending; credit rationing (search for similar items in EconPapers)
JEL-codes: D22 G21 G22 (search for similar items in EconPapers)
Pages: 38
Date: 2016-09
New Economics Papers: this item is included in nep-ban, nep-bec, nep-cfn and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Working Paper: Relational capital in lending relationships: Evidence from European family firms (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:anc:wmofir:128

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