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Small business, lending relationships and crisis: evidence from Indian micro data

Saibal Ghosh

DECISION: Official Journal of the Indian Institute of Management Calcutta, 2016, vol. 43, issue 1, 1-15

Abstract: Abstract Using data on Indian small and medium enterprises (SMEs) for 1996–2010, the paper investigates four issues: (a) the factors influencing lending relationships; (b) the cost of borrowings; (c) the effect of the financial crisis and (d) the impact of main bank ownership on SMEs. The findings indicate that small business typically maintain multiple banking relationships, which provide benefits in terms of lower borrowing costs. In addition, the analysis also suggests that firms associated with state-owned main banks are less likely to forge multiple lending relationships. Finally, the results indicate that the number of banking relationships drop during crisis period, especially for state-owned banks.

Keywords: SMEs; Bank ownership; Lending relationship; Borrowing costs; Crisis; India (search for similar items in EconPapers)
JEL-codes: G21 L25 (search for similar items in EconPapers)
Date: 2016
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