Relying More, Depending Less: Group Affiliation and Bank Financing among SMEs

Lucas Marchand ()
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Lucas Marchand: LAPE - Laboratoire d'Analyse et de Prospective Economiques - GIO - Gouvernance des Institutions et des Organisations - UNILIM - Université de Limoges

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Abstract: This paper examines how group affiliation affects SMEs' reliance on bank financing. We exploit firms' entry into a corporate group as a shock to credibility and access to internal funding sources using a staggered difference-in-differences framework with matched controls. We find that group affiliation increases SMEs' reliance on bank credit in their financing mix, while reducing their dependence on individual lenders as firms diversify their banking relationships. This effect operates through reputation transfer and reduced informational opacity, facilitating credit access and lowering borrowing costs. Overall, our findings highlight the credibility and transparency gains resulting from group affiliation and the enduring role of banks in SMEs' financing when alternative funding sources become available.

Keywords: corporate groups; SMEs; bank financing; banking relationships (search for similar items in EconPapers)
Date: 2026-09-28
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-05771438

DOI: 10.13140/RG.2.2.13860.85122

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