Firm Failure and Relationship Lending: New Evidence from Small Businesses

Jose Gomez-Gonzalez and Nidia Reyes ()

No 7873, Borradores de Economia from Banco de la Republica

Abstract: We study the effect of relationship lending on small firms´ failure probability using a uniquely rich data set comprised of information on individual loans of a large number of small firms in Colombia. We control for firm-specific variables and find that small firms involved in long-term liaisons with commercial banks have a significantly lower probability of becoming bankrupt than otherwise identical firms not involved in a long-term credit relationship. We also find that small firms with multiple banking relationships face a lower failure hazard than otherwise identical firms involved in a unique long-term relationship.

Keywords: Firms; bank relationships; survival analysis. (search for similar items in EconPapers)
JEL-codes: C40 G20 G21 (search for similar items in EconPapers)
Pages: 16
Date: 2011-01-23
New Economics Papers: this item is included in nep-ban, nep-bec, nep-ent and nep-sbm
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http://www.banrep.gov.co/docum/ftp/borra638.pdf

Related works:
Working Paper: Firm Failure and Relationship Lending:New Evidence from Small Businesses (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:col:000094:007873

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