Relational Capital in Lending Relationships. Evidence from European Family Firms

Marco Cucculelli, Valentina Peruzzi and Alberto Zazzaro ()

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: We investigate the role of a family CEO’s relational capital and a non-family CEO’s managerial abilities in the context of bank relationships for a large sample of small- and medium-sized European firms. We begin by examining whether the relational capital embodied in the family leadership of the company influences the lending relationship with the bank in terms of information sensitivity and duration. Next, we test how banks value in their credit decisions the leadership of professionals and their managerial skills with respect to the relational capital of family CEOs. The results indicate that family businesses appointing managers from within the family are significantly more likely to maintain soft-information-based and longer-lasting lending relationships. However, family executives do not have a negative impact on the firm’s access to credit, while the creation of soft-information-based and long-lasting lending relationships significantly reduce the likelihood of experiencing credit restrictions. In view of these findings, family relational capital appears to have a univocal beneficial impact on the 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)
Date: 2018-02-01
New Economics Papers: this item is included in nep-ban, nep-bec, nep-cfn, nep-eur, nep-hrm, nep-sbm and nep-soc
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Relational capital in lending relationships: evidence from European family firms (2019)
Working Paper: Relational capital in lending relationships: Evidence from European family firms (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:491

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