SME’s main bank choice and organizational structure: Evidence from France

Hiba El Hajj Chehade and Ludovic Vigneron

Working Papers of LaRGE (Laboratoire de Recherche en Gestion et Economie) from Laboratoire de Recherche en Gestion et Economie, Université de Strasbourg (France)

Abstract: The theory suggests that decentralized structures are more efficient than hierarchical ones in decisions based on soft information. According to this, small banks that often have a decentralised structure are more attractive when customers are opaque ones. We propose to test this affirmation using a panel of 6.258 couples (main bank/SME) working in the French market. The results of our several regressions show the existence of a strong tie between the firm’s informational opacity and the choice of a decentralised bank. Moreover, opaque firms are more likely to be credit constrained if they choose a hierarchical bank as their main bank.

Keywords: Main bank; informational opacity; organizational structure; small and medium sized businesses; relationship lending. (search for similar items in EconPapers)
JEL-codes: G21 D82 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban and nep-ent
Date: 2007

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Persistent link: http://EconPapers.repec.org/RePEc:lar:wpaper:2007-06

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