SME financing and the choice of lending technology in Italy: Complementarity or substitutability?

Francesca Bartoli, Giovanni Ferri, Pierluigi Murro and Zeno Rotondi

Journal of Banking & Finance, 2013, vol. 37, issue 12, 5476-5485

Abstract: This paper investigates SME financing in Italy. The literature distinguishes between two main different lending technologies (LTs) for SMEs: transactional and relationship LTs. We find that banks lend to SMEs by using both LTs together, independently of the size and proximity of borrowers. Moreover, we show that the use of soft information decreases the probability of firms being credit rationed. Finally, we find that more soft information is produced when the bank uses relationship LT as primary technology individually or coupled with transactional LT. Our results support the view that LTs can be complementary, but reject the hypothesis that substitutability among LTs is somehow possible for outsiders by means of hardening of soft information.

Keywords: Lending technologies; Bank–firm relationship; Soft information; Hard information; Small business finance (search for similar items in EconPapers)
JEL-codes: G21 G30 O16 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (65)

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Related works:
Working Paper: SME Financing and the Choice of Lending Technology in Italy: Complementarity or Substitutability? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:37:y:2013:i:12:p:5476-5485

DOI: 10.1016/j.jbankfin.2013.08.007

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