This paper examines the firms' credit availability during the 2007-2009 financial crisis using a dataset of 5331 bank-firm relationships provided by borrowers' credit folders of three Italian banks. It aims to test whether a strong lender-borrower relationship can produce less credit rationing for borrowing firms even during a credit crunch period. The results show that exclusivity of the relationship can mitigate the firm credit rationing. We also verify the influence of lending organizational structure during crisis. A new measure of distance in lending technologies has been introduced: the hierarchical distance calculated as the distance between the branch that originates the loan and the location of the hierarchical level responsible for financing decision. Our findings document a negative impact of distance on credit availability, consistent with the idea that proximity facilitates the transmission of soft information. © 2012 Elsevier B.V.
Cotugno, M., Monferra', S., Sampagnaro, G., Relationship lending, hierarchical distance and credit tightening: Evidence from the financial crisis, <<JOURNAL OF BANKING & FINANCE>>, 2013; 37 (5): 1372-1385. [doi:10.1016/j.jbankfin.2012.07.026] [http://hdl.handle.net/10807/135217]
Relationship lending, hierarchical distance and credit tightening: Evidence from the financial crisis
Monferra', StefanoMembro del Collaboration Group
;
2013
Abstract
This paper examines the firms' credit availability during the 2007-2009 financial crisis using a dataset of 5331 bank-firm relationships provided by borrowers' credit folders of three Italian banks. It aims to test whether a strong lender-borrower relationship can produce less credit rationing for borrowing firms even during a credit crunch period. The results show that exclusivity of the relationship can mitigate the firm credit rationing. We also verify the influence of lending organizational structure during crisis. A new measure of distance in lending technologies has been introduced: the hierarchical distance calculated as the distance between the branch that originates the loan and the location of the hierarchical level responsible for financing decision. Our findings document a negative impact of distance on credit availability, consistent with the idea that proximity facilitates the transmission of soft information. © 2012 Elsevier B.V.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.