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 the use of soft information decreases the probability of firms being credit rationed. Finally, we find that more soft information is produced when the bank uses relationship LT as primary technology individually or coupled with transactional LT. Our 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. © 2013 Elsevier B.V.

SME financing and the choice of lending technology in Italy: Complementarity or substitutability? / Francesca, Bartoli; Ferri, Giovanni; Murro, Pierluigi; Rotondi, Zeno. - In: JOURNAL OF BANKING & FINANCE. - ISSN 0378-4266. - 37:12(2013), pp. 5476-5485. [10.1016/j.jbankfin.2013.08.007]

SME financing and the choice of lending technology in Italy: Complementarity or substitutability?

Giovanni Ferri;Pierluigi Murro;ROTONDI, ZENO
2013

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 the use of soft information decreases the probability of firms being credit rationed. Finally, we find that more soft information is produced when the bank uses relationship LT as primary technology individually or coupled with transactional LT. Our 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. © 2013 Elsevier B.V.
Bank-firm relationship; Hard information; Lending technologies; Small business finance; Soft information; Finance; Economics and Econometrics
SME financing and the choice of lending technology in Italy: Complementarity or substitutability? / Francesca, Bartoli; Ferri, Giovanni; Murro, Pierluigi; Rotondi, Zeno. - In: JOURNAL OF BANKING & FINANCE. - ISSN 0378-4266. - 37:12(2013), pp. 5476-5485. [10.1016/j.jbankfin.2013.08.007]
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11385/181563
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