SME Financing and the Choice of Lending Technology in Italy: Complementarity or Substitutability?

Francesca Bartoli (), Giovanni Ferri, Pierluigi Murro () and Zeno Rotondi ()
Additional contact information
Francesca Bartoli: UniCredit Group
Pierluigi Murro: LUISS Guido Carli University, Department of Economics and Finance and CASMEF
Zeno Rotondi: UniCredit Group

No 1212, Working Papers CASMEF from Dipartimento di Economia e Finanza, LUISS Guido Carli

Abstract: This paper investigates SME financing in Italy. The literature distinguishes between two main different lending technologies (LTs) for SMEs: transactional and relationship LTs. We find that banks lend to SMEs by using both LTs together, independently of the size and proximity of borrowers. Moreover, we show that when soft information is taken into account in transactional (relationship) lending it increases (decreases) the probability of firms being credit rationed. These results support the view that LTs can be complementary, but reject the hypothesis that substitutability among LTs is somehow possible for outsiders by means of hardening of soft information.

Keywords: Lending technologies; bank-firm relationship; soft information; hard information; small business finance. (search for similar items in EconPapers)
JEL-codes: G21 G30 O16 (search for similar items in EconPapers)
Date: 2012
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Related works:
Journal Article: SME financing and the choice of lending technology in Italy: Complementarity or substitutability? (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:lui:casmef:1212

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