Does banking relationship configuration affect the risk-taking behavior of French SMEs?

Ludovic Vigneron and Ramzi Benkraiem

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Abstract: Using a new and unique dataset dealing with French small and medium-sized enterprise (SME) financing that provides detailed information about 1 116 firm-bank relationships, we test how the number of banks with which a firm works and the organizational structure of its main bank influence its risk-taking behavior. We find evidence that SMEs engaged with a decentralized main bank (a local or mutual one) invest in less risky projects, especially when they work with fewer than three banks (one or two). We also find evidence that single-bank SMEs engaged with a centralized bank (a large or foreign one) take significantly more risks than the others.

Keywords: Bank relationships; risk-taking behavior; SMEs (search for similar items in EconPapers)
Date: 2015
Note: View the original document on HAL open archive server: https://audencia.hal.science/hal-01338638v1
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Published in Economics and Business Letters, 2015, 4 (4), pp.166-174. ⟨10.17811/ebl.4.4.2015.166-174⟩

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Journal Article: Does banking relationship configuration affect the risk-taking behavior of French SMEs? (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01338638

DOI: 10.17811/ebl.4.4.2015.166-174

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