Do Firm-Bank ``Odd Couples'' Exacerbate Credit Rationing?

Giovanni Ferri and Pierluigi Murro

No 1207, Working Papers CASMEF from Dipartimento di Economia e Finanza, LUISS Guido Carli

Abstract: This paper tests the impact of an imperfect bank-firm type match on firms' financial constraints using a dataset of about 4,500 Italian manufacturing firms. We start considering an optimal matching of opaque (transparent) borrowing firms with relational (transactional) lending main banks. Next we contemplate the possibility that firm-bank "odd couples" materialize where opaque (transparent) firms end up matched with transactional (relational) main banks. Our results show that more than 25% of the firms falls into an "odd couple". Moreover, we find that the probability of rationing is larger when firms and banks match in "odd couples". We conjecture the "odd couples" emerge either since the bank's lending technology is not perfectly observable to the firm or because riskier firms - even though opaque - strategically select transactional banks in the hope of being classified as lower risks.

Keywords: Bank-firm Relationship; Asymmetric Information; Credit Rationing. (search for similar items in EconPapers)
JEL-codes: D82 G21 G30 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-ban, nep-bec and nep-cta
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Do firm–bank ‘odd couples’ exacerbate credit rationing? (2015)
Working Paper: Do Firm-Bank `Odd Couples' Exacerbate Credit Rationing? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:lui:casmef:1207

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