Long-lasting bank relationships and growth of firms

Small Business Economics

Volumn 40, Issue 4, 2013, Pages 977-1007

  Gambini, Alessandro ^a   Zazzaro, Alberto ^a  

^a UNIVERSITÀ POLITECNICA DELLE MARCHE   (Italy)

Author keywords

Capture effects; Firms' growth; Relationship lending

Indexed keywords

EID: 84876685311     PISSN: 0921898X     EISSN: 15730913     Source Type: Journal    
DOI: 10.1007/s11187-011-9406-8     Document Type: Article

References (112)

1. Agarwal, R., & Elston, J. A. (2001). Bank-firm relationships, financing and firm performance in Germany. Economic Letters, 72, 225-232.
2. Alessandrini, P., Presbitero, A. F., & Zazzaro, A. (2009). Banks, distances and firms' financing constraints. Review of Finance, 13, 261-307.
3. Alessandrini, P., Presbitero, A. F., & Zazzaro, A. (2010). Banks size or distance: What hampers innovation adoption by SMEs? Journal of Economic Geography, 10, 845-881.
4. Andrews, D. W. K., & Stock, J. H. (2005). Inference with weak instruments. Cowles Foundation Discussion Paper No. 1530.
5. Angelini, P., Di Salvo, R., & Ferri, G. (1998). Availability and cost of credit for small business: Customer relationships and credit cooperatives. Journal of Banking & Finance, 22, 925-954.
6. Audretsch, D. B. (1995). Innovation and industry evolution. Cambridge: The MIT Press.
7. Audretsch, D. B., Klomp, L., Santarelli, E., & Thurik, A. R. (2004). Gibrat's law: Are the services different? Review of Industrial Organization, 24, 301-324.
8. Bank of Italy. (2010). Annual Report: 2009 Financial Year, Rome: Bank of Italy. http://www. bancaditalia. it/pubblicazioni/relann/rel09/rel09en/en_rel_2009. pdf. Accessed 1 Oct 2011.
9. Barone, G., Felici, R. & Pagnini, M. (2010). Switching costs in local credit markets, Temi di discussione No. 760, Bank of Italy.
10. Becchetti, L., & Trovato, G. (2002). The determinants of growth for small and medium sized firms. The role of the availability of external finance. Small Business Economics, 19, 291-306.
11. Benfratello, L., Schiantarelli, F., & Sembenelli, A. (2008). Banks and innovation: Microeconometric evidence on Italian firms. Journal of Financial Economics, 90, 197-217.
12. Berger, A. N., & Udell, G. (1995). Relationship lending and lines of credit in small firm finance. Journal of Business, 3, 351-381.
13. Bernard, A. B., Redding, S. J., & Schott, P. K. (2009). Products and productivity. Scandinavian Journal of Economics, 111, 681-709.
14. Bharath, S., Dahiya, S., Saunders, A., & Srinivasan, A. (2007). So what do i get? The bank's view of lending relationships. Journal of Financial Economics, 85, 368-419.
15. Bharath, S., Dahiya, S., Saunders, A., & Srinivasan, A. (2011). Lending relationships and loan contract terms. Review of Financial Studies, 24, 1141-1203.
16. Bonaccorsi, A., & Giannangeli, S. (2005). Why new firms never get large? Evidence on post-entry growth of Italian new firms. Rivista di Politica Economica, 95, 137-180.
17. Boot, A. (2000). Relationship banking: What do we know? Journal of Financial Intermediation, 9, 7-25.
18. Boot, A., & Thakor, A. (2000). Can relationship banking survive competition? Journal of Finance, 55, 679-713.
19. Brunner, A., & Krahnen, J. P. (2008). Multiple lenders and corporate distress: Evidence on debt restructuring. Review of Economic Studies, 75, 415-442.
20. Cabral, L. M. B. (2007). Small firms in Portugal: A selective survey of stylized facts, economic analysis, and policy implications. Portuguese Economic Journal, 6, 65-88.
21. Carpenter, R., & Petersen, B. (2002). Is the growth of small firms constrained by internal finance? Review of Economics and Statistics, 84, 298-309.
22. Chakraborty, A., & Hu, C. X. (2006). Lending relationships in line-of-credit and nonline-of-credit loans: Evidence from collateral use in small business. Journal of Financial Intermediation, 15, 86-107.
23. Chao, J. C., & Swanson, N. R. (2005). Consistent estimation with a large number of weak instruments. Econometrica, 73, 1673-1692.
24. Chirinko, R., & Elston, J. A. (2006). Finance, control and profitability: The influence of German banks. Journal of Economic Behaviour & Organization, 59, 69-88.
25. Cole, R. A. (1998). The importance of relationships to the availability of credit. Journal of Banking & Finance, 22, 227-251.
26. Contini, B., & Revelli, R. (1989). The relationship between firm growth and labour demand. Small Business Economics, 1, 309-314.
27. Degryse, H., & Ongena, S. (2001). Bank relationships and firm profitability. Financial Management, 30, 9-34.
28. Degryse, H., & van Cayseele, P. (2000). Relationship lending within a bank-based system: Evidence from European small business data. Journal of Financial Intermediation, 9, 90-109.
29. Dell'Ariccia, G., & Marquez, R. (2004). Information and bank credit allocation. Journal of Financial Economics, 72, 185-214.
30. Dewatripont, M., & Maskin, E. (1995). Credit and efficiency in centralized and decentralized economies. Review of Economic Studies, 62, 541-555.
31. Dunne, P., & Hughes, A. (1994). Age, size, growth and survival: UK companies in the 1980s. Journal of Industrial Economics, 42, 115-140.
32. Dunne, T., Roberts, M. J., & Samuelson, L. (1989). The growth and failure of manufacturing plants. Quarterly Journal of Economics, 104, 671-698.
33. Dwyer, D. W., Kocagil, A. E. & Stein, R. M. (2004). The Moody's KMV EDF RiskCalc v3. 1 Model: Next Generation technology for predicting private firm risk, Moody's KMV Company: San Francisco.
34. ECB. (1999). Possible Effects of EMU on the EU Banking Systems in the Medium To Long Term, Frankfurt: European Central Bank. http://www. ecb. int/pub/pdf/other/emubnken. pdf. Accessed 1 Oct 2011.
35. ECB. (2010). EU Banking Structures, Frankfurt: European Central Bank. http://www. ecb. int/pub/pdf/other/eubankingstructures201009en. pdf. Accessed 1 Oct 2011.
36. Elsas, R. (2005). Empirical determinants of relationship lending. Journal of Financial Intermediation, 14, 32-57.
37. Elston, J. A. (2002). An examination of the relationship between firm size, growth, and liquidity in the Neuer market. Economic Research Center of the Deutsche Bundesbank Discussion Paper Series No. 15.
38. Evans, D. S. (1987). Tests of alternative theories of firm growth. Journal of Political Economy, 95, 657-674.
39. Fagiolo, G., & Luzzi, A. (2006). Do liquidity constraints matter in explaining firm size and growth? Some evidence from the Italian manufacturing industry. Industrial and Corporate Change, 15, 1-39.
40. Foglia, A., Laviola, S., & Marullo Reedtz, P. (1998). Multiple banking relationships and the fragility of corporate borrowers. Journal of Banking & Finance, 22, 1441-1456.
41. Fok, R. C., Chang, Y. C., & Lee, W. T. (2004). Bank relationships and their effects on firm performance around the asian financial crisis: Evidence from Taiwan. Financial Management, 33, 89-112.
42. Geroski, P. A. (2005). Understanding the implications of empirical work on corporate growth rates. Managerial and Decision Economics, 26, 129-138.
43. Gibrat, R. (1931). Les Inegalités Economiques. Paris: Sirey.
44. Greene, W. H. (2003). Econometric analysis. New York: New York University.
45. Grunert, J., & Norden, L. (2011). Bargaining power and information in SME lending. Small Business Economics. doi: 10. 1007/s11187-010-9311-6.
46. Guiso, L., Sapienza, P., & Zingales, L. (2004a). Does local financial development matter? Quarterly Journal of Economics, 119, 929-969.
47. Guiso, L., Sapienza, P., & Zingales, L. (2004b). The role of the social capital in financial development. American Economic Review, 94, 526-556.
48. Hall, B. H. (1987). The relationship between firm size and firm growth in the US manufacturing sector. Journal of Industrial Economics, 35, 583-606.
49. Harhoff, D., & Körting, T. (1998). Lending relationships in Germany-Empirical evidence from survey data. Journal of Banking & Finance, 22, 1317-1353.
50. Harhoff, D., Stahl, K., & Woywode, M. (1998). Legal form, growth and exit of West German firms. Empirical results for manufacturing, construction, trade and service industries. Journal of Industrial Economics, 46, 453-488.
51. Hart, P. E., & Prais, S. J. (1956). The analysis of business concentration: A statistical approach. Journal of the Royal Statistical Society, 119, 150-181.
52. Hauswald, R., & Marquez, R. (2006). Competition and strategic information acquisition in credit markets. Review of Financial Studies, 19, 967-1000.
53. Heckman, J. (1979). Sample selection bias as a specification error. Econometrica, 47, 153-161.
54. Hernandez, G., & Martinez, P. (2006). Banking relationships: Effects on the debt terms for small Spanish firms. Journal of Small Business Management, 44, 315-333.
55. Herrera, A. M., & Minetti, R. (2007). Informed finance and technological change: Evidence from credit relationships. Journal of Financial Economics, 83, 223-269.
56. Heshmati, A. (2001). On the growth of micro and small firms: Evidence from Sweden. Small Business Economics, 17, 213-228.
57. Honjo, Y., & Harada, N. (2006). SME policy, financial structure and firm growth: Evidence from Japan. Small Business Economics, 27, 289-300.
58. Hoshi, T., Kashyap, A., & Scharfstein, D. (1990). The role of banks in reducing financial distress in Japan. NBER Working Paper No. 3435.
59. Houston, J. F., & James, C. M. (2001). Do relationships have limits? Banking relationships, financial constraints and investment. Journal of Business, 74, 347-374.
60. Hymer, S., & Pashigian, P. (1962). Firm size and rate of growth. Journal of Political Economy, 70, 556-569.
61. Ijiri, Y., & Simon, H. A. (1977). Skew distribution and the size of business firms. Amsterdam: North-Holland.
62. Ioannidou, V., & Ongena, S. (2010). Time for a change: Loan conditions and bank behavior when firms switch banks. Journal of Finance, 65, 1847-1877.
63. Jappelli, T., Pagano, M., & Bianco, M. (2005). Courts and banks: Effects of judicial enforcement on credit markets. Journal of Money, Credit and Banks, 37, 223-244.
64. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3, 305-360.
65. Jiménez, G., Lopez ans, J. A., & Saurina, J. (2009). Empirical analysis of corporate credit lines. Review of Financial Studies, 22, 5069-5098.
66. Johnson, S. H., La Porta, R., Lopez de Silanes, F., & Shleifer, A. (2000). Tunnelling. American Economic Review Papers and Proceedings, 90, 22-27.
67. Jovanovic, B. (1982). Selection and evolution of industry. Econometrica, 50, 649-670.
68. Kang, J.-K., & Shivdasani, A. (1997). Corporate restructuring during performance declines in Japan. Journal of Financial Economics, 46, 29-65.
69. Kawai, M., Hashimoto, J., & Izumida, S. (1996). Japanese firms in financial distress and main banks: Analyses of interest-rate premia. Japan and the World Economy, 8, 175-194.
70. Kumar, M. S. (1985). Growth, acquisition activity and firm size: Evidence from the United Kingdom. Journal of Industrial Economics, 33, 327-338.
71. Lang, L., Ofek, E., & Stulz, R. M. (1996). Leverage, investment and firm growth. Journal of Financial Economics, 40, 3-29.
72. Longhofer, S. D., & Santos, J. A. C. (2000). The importance of bank seniority for relationship lending. Journal of Financial Intermediation, 9, 57-89.
73. Lotti, F., Santarelli, E., & Vivarelli, M. (2003). Does Gibrat's law hold among young, small firms? Journal of Evolutionary Economics, 13, 213-235.
74. Mansfield, E. (1962). Entry, gibrat's law, innovation, and the growth of firms. American Economic Review, 52, 1031-1051.
75. Mata, J. (1994). Firm growth during infancy. Small Business Economics, 6, 27-40.
76. Miarka, T. (1999). The recent economic role of bank-firm relationships in Japan, Wissenschaftszentrum Berlin.
77. Mikusheva, A., & Poi, B. P. (2006). Tests and confidence sets with correct size when instruments are potentially weak. The Stata Journal, 6, 335-347.
78. Montoriol Garriga, J. (2006). The effect of relationship lending on firm performance, Universitat Autònoma de Barcelona Documents de Treball No. 06/5.
79. Moreira, M. (2003). A conditional likelihood ratio test for structural models. Econometrica, 71, 1027-1048.
80. Murray, M. P. (2006). Avoiding invalid instruments and coping with weak instruments. Journal of Economic Perspectives, 20, 111-132.
81. Myers, S., & Majluf, N. (1984). Corporate financing decisions when firms have investment information that investors do not. Journal of Financial Economics, 13, 187-220.
82. Nakatani, I. (1984). The role of financial corporate grouping. In M. Aoki (Ed.), Economic analysis of the Japanese firm. New York: North-Holland.
83. Nese, A., & O'Higgins, N. (2007). Attrition bias in the capitalia panel. International Review of Economics, 54, 383-403.
84. OECD. (2004). Employment Outlook. Paris.
85. Ogawa, K., Sterken, E., & Tokutsu, I. (2007). Why do Japanese firms prefer multiple bank relationship? Some evidence from firm-level data. Economic Systems, 31, 49-70.
86. Oliveira, B., & Fortunato, A. (2006). Firm growth and liquidity constraints: A dynamic analysis. Small Business Economics, 27, 139-156.
87. Ongena, S., & Smith, D. C. (2000). What determines the number of bank relationships? Cross-country evidence. Journal of Financial Intermediation, 9, 26-56.
88. Ongena, S., & Smith, D. C. (2001). The duration of bank relationships. Journal of Financial Economics, 61, 449-475.
89. Ono, A. & Uesugi, I. (2005). The role of collateral and personal guarantees in relationship lending: Evidence from Japan's small business loan market. RIETI Discussion Paper Series 05-E-027.
90. Opler, T., & Titman, S. (1994). Financial distress and corporate performance. Journal of Finance, 49, 1015-1040.
91. Peek, J., & Rosengren, E. S. (2005). Unnatural selection: Perverse incentives and the misallocation of credit in Japan. American Economic Review, 95, 1144-1166.
92. Petersen, M. A., & Rajan, R. G. (1994). The benefits of lending relationships: Evidence from small business data. Journal of Finance, 49, 3-37.
93. Petersen, M. A., & Rajan, R. G. (1995). The effect of credit market competition on lending relationships. Quarterly Journal of Economics, 110, 406-443.
94. Pozzolo, A. F. (2004). The role of guarantees in bank lending. Temi di discussione No. 528, Bank of Italy.
95. Presbitero, A. F., & Zazzaro, A. (2011). Competition and relationship lending: Friends or foes. Journal of Financial Intermediation, 20, 387-413.
96. Rajan, R. G. (1992). Insiders and outsiders: The choice between informed and arm's-length debt. Journal of Finance, 47, 1367-1400.
97. Rajan, R. G., Servaes, H., & Zingales, L. (2000). The cost of diversity: The diversification discount and inefficient investment. Journal of Finance, 55, 35-80.
98. Ross, S. (1977). The determination of financial structure: The incentive-signaling approach. Bell Journal of Economics, 8, 23-40.
99. Rossi-Hansberg, E., & Wright, M. L. J. (2007). Establishment size dynamics in the aggregate economy. American Economic Review, 97, 1639-1666.
100. Sakai, K., Uesugi, I. & Watanabe, T. (2005). Firm age and the evolution of borrowing costs: Evidence from Japanese small firms, RIETI Discussion Paper Series 05-E-026.
101. Sharpe, S. A. (1990). Asymmetric information, bank lending and implicit contracts: A stylized model of customer relationships. Journal of Finance, 45, 1069-1087.
102. Shin, H. G., & Kolari, J. W. (2004). Do some lenders have information advantages? Evidence from Japanese credit market data. Journal of Banking & Finance, 28, 2321-2351.
103. Solinas, G. (1995). Le imprese nuove nate e la legge di Gibrat. Economia e Lavoro, 26, 117-139.
104. Stock, J. H., & Yogo, M. (2005). Testing for weak instruments in linear IV regression. In D. W. K. Andrews & J. H. Stock (Eds.), Identification and inference for econometric models: Essays in honor of Thomas Rothenberg (pp. 80-108). Cambridge: Cambridge University Press.
105. Stulz, R. M. (1990). Managerial discretion and optimal financing policies. Journal of Financial Economics, 26, 3-27.
106. Sutton, J. (1997). Gibra's legacy. Journal of Economic Literature, 35, 40-59.
107. Variyam, J. N., & Kraybill, D. S. (1992). Empirical evidence on determinants of firm growth. Economic Letters, 38, 31-36.
108. Weinstein, D., & Yafeh, Y. (1998). On the costs of a bank-centered financial system: Evidence from the changing main bank relations in Japan. Journal of Finance, 53, 635-672.
109. Weinzimmer, L. G., Nystrom, P. S., & Freeman, S. J. (1998). Measuring organizational growth: Issues, consequences and guidelines. Journal of Management, 24, 235-262.
110. Williamson, O. (1976). Franchise bidding for natural monopolies-In general and with respect to CATV. Bell Journal of Economics, 7, 73-104.
111. Williamson, O. (1985). The economic institutions of capitalism. New York: Free.
112. Yafeh, Y., & Yosha, O. (2003). Large shareholders and banks: Who monitors and how. Economic Journal, 113, 128-146.