EconPapers    
Economics at your fingertips  
 

Firm-bank trusting relationship and discouraged borrowers

Ying Tang, Chao Deng and Andrea Moro ()
Additional contact information
Ying Tang: Central South University
Chao Deng: Central South University
Andrea Moro: Cranfield University

Review of Managerial Science, 2017, vol. 11, issue 3, No 1, 519-541

Abstract: Abstract Firms can be credit constrained both because banks deny credit when they apply for it and because they refrain from filing for the loan in the first place, anticipating rejection. Interestingly the latter aspect has been only marginally investigated, so far and, no previous research pays attention to firm manager’s trust in the loan manager as a factor that can affect firm’s decision to file for a loan. Present research investigates the role of the trust of firm’s managers in the loan managers as a determinant of not being discouraged from applying for a loan by looking at a strictly randomly selected sample of firms in China. By relying on a structural equation model that investigates both the direct and the mediating role of trust we find that the firm manager’s trust in the loan manager affects the firm’s decision to file for a loan by reducing the firm’s risk of being a discouraged borrower. We also discover that trust mediates the role of the firm manager’s experience and the monitoring activity pursued by the bank.

Keywords: Trust; Small firm; Discouraged borrower; Relationship; Loan availability (search for similar items in EconPapers)
JEL-codes: G40 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://link.springer.com/10.1007/s11846-016-0194-z Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:rvmgts:v:11:y:2017:i:3:d:10.1007_s11846-016-0194-z

Ordering information: This journal article can be ordered from
http://www.springer.com/business/journal/11846

DOI: 10.1007/s11846-016-0194-z

Access Statistics for this article

Review of Managerial Science is currently edited by R. Ewert and W. Kürsten

More articles in Review of Managerial Science from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2025-03-20
Handle: RePEc:spr:rvmgts:v:11:y:2017:i:3:d:10.1007_s11846-016-0194-z