Family firms and access to credit. Is family ownership beneficial?

Pierluigi Murro and Valentina Peruzzi

No wpC23, CERBE Working Papers from CERBE Center for Relationship Banking and Economics

Abstract: This paper investigates the effect of family ownership on credit rationing using a rich sample of Italian manufacturing firms. We find that family ownership increases the probability of credit rationing. Conflicts between large and minority shareholders, family firms’ lack of competencies and conservatism appear to be the main determinants of this result. By contrast, family owners’ long-termism, risk aversion, and relationship lending mitigate the adverse impact of family ownership on firms’ credit availability. Finally, we find that family businesses are more likely to be rationed in provinces with high level of social capital and judicial efficiency, suggesting that delegation problems are mitigated by personal relationships in areas where cooperation mechanisms are weaker.

Keywords: Family firms; credit rationing; agency conflicts; relationship lending (search for similar items in EconPapers)
JEL-codes: D22 G21 G32 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2017-10
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-eur, nep-sbm and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Family firms and access to credit. Is family ownership beneficial? (2019)
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