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Credit Rationing and the Relationship Between Family Businesses and Banks in Italy

Giovanni Ferri, Pierluigi Murro () and Marco Pini ()
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Marco Pini: Unioncamere

No wpC24, CERBE Working Papers from CERBE Center for Relationship Banking and Economics

Abstract: We investigate whether family businesses (FBs) suffer stiffer credit rationing in the post-crisis Italian economy. FBs are, in fact, typically more opaque than other firms, possibly deterring bank lending to them. Moreover, regulatory changes may lead many banks to abandon relationship lending, weakening their ability to evaluate opaque firms. Using detailed firm data, our estimates reach nuanced conclusions. First, credit rationing is not more intense at FBs. However, it systematically intensifies if FBs engage in firm-bank arrangements less able to overcome information asymmetries either coupling with a main bank that uses transactional lending or diluting relationships across various banking partners.

Keywords: Family firms; Firm-bank relationship; Bank lending technologies; Credit Rationing (search for similar items in EconPapers)
JEL-codes: D22 G32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-cfn, nep-eff and nep-eur
Date: 2018-03
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