The ability of banks to lend to informationally opaque small businesses

Allen N. Berger (), Leora F. Klapper () and Gregory Udell ()

No 2001-34, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We test hypotheses about the effects of bank size, foreign ownership, and distress on lending to informationally opaque small firms using a rich new data set on Argentinean banks, firms, and loans. We also test hypotheses about borrowing from a single bank versus multiple banks. Our results suggest that large and foreign-owned institutions may have difficulty extending relationship loans to opaque small firms. Bank distress appears to have no greater effect on small borrowers than on large borrowers, although even small firms may react to bank distress by borrowing from multiple banks, raising borrowing costs and destroying some relationship benefits.

Keywords: Small business; Bank loans (search for similar items in EconPapers)
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Date: 2001
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Related works:
Working Paper: The ability of banks to lend to informationally opaque small businesses (2001)
Journal Article: The ability of banks to lend to informationally opaque small businesses (2001)
Journal Article: The ability of banks to lend to informationally opaque small businesses (2001)
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