Enduring lending relationships and european firms default

Mariarosaria Agostino, Lucia Errico, Sandro Rondinella and Francesco Trivieri

Research in Economics, 2023, vol. 77, issue 4, 459-477

Abstract: This paper investigates the link between close banking relationships and European manufacturing firms’ defaults. Based on binary outcomes (i.e., Logit, Probit, Complementary log-log) and discrete-time models, the empirical analysis reveals that enduring lending relationships present benefits in reducing firms’ temporary and permanent defaults. This evidence suggests that, in a framework of limited credit access that may compromise firms’ survival, relationship lending might represent an effective tool for overcoming asymmetric information problems, helping firms relax credit constraints, encouraging greater discipline in their managers, and preventing failure.

Keywords: Lending relationships; Firms default; Survival analysis (search for similar items in EconPapers)
JEL-codes: G20 G33 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1090944323000480
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:77:y:2023:i:4:p:459-477

DOI: 10.1016/j.rie.2023.07.001

Access Statistics for this article

Research in Economics is currently edited by Federico Etro

More articles in Research in Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().