Differentiated Use of Small Business Credit Scoring by Relationship Lenders and Transactional Lenders: Evidence from firm-bank matched data in Japan

Ryo Hasumi, Hideaki Hirata () and Arito Ono

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This paper examines the ex-post performance of small and medium-sized enterprises (SMEs) that obtained small business credit scoring (SBCS) loans. Using a unique Japanese firm-bank matched dataset, we identify whether an SME has obtained an SBCS loan and, if so, from which type of bank: a relationship lender or a transactional lender. We find that the ex-post probability of default after the SBCS loan was provided significantly increased for SMEs that obtained an SBCS loan from a transactional lender. We also find that the lending attitude of relationship lenders in the midst of the recent global financial crisis became much more severe if a transactional lender had extended an SBCS loan to a firm. These findings suggest that SBCS loans by a transactional lender are detrimental to a relationship lender's incentive to monitor SMEs and maintain relationships. In contrast, we do not find such detrimental effects for SBCS loans extended by a relationship lender.

Pages: 43 pages
Date: 2011-10
New Economics Papers: this item is included in nep-ban and nep-ent
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Citations: View citations in EconPapers (2)

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https://www.rieti.go.jp/jp/publications/dp/11e070.pdf (application/pdf)

Related works:
Journal Article: Differentiated use of small business credit scoring by relationship lenders and transactional lenders: Evidence from firm–bank matched data in Japan (2014)
Working Paper: Differentiated Use of Small Business Credit Scoring by Relationship Lenders and Transactional Lenders: Evidence from Firm-Bank Matched Data in Japan (2012)
Working Paper: Differentiated Use of Small Business Credit Scoring by Relationship Lenders and Transactional Lenders: Evidence from Firm?Bank Matched Data in Japan
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:11070

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