Effect of the Number of Banking Relationships on Credit Availability: Evidence from Panel Data of Spanish Small Firms

Effect of the Number of Banking Relationships on Credit Availability: Evidence from Panel Data of... This paper investigates how the choice between single or multiple banking relationships affects credit availability for a complete panel of small and medium-sized Spanish firms. The results seem to indicate the existence of rationing, since a substitution relation has been found between trade and bank credit. We also analyse the relationship between the level of indebtedness and the interest rate for each group of firms. The results show that those SMEs that work with fewer financial intermediaries obtain fewer funds for the same increase in the interest rate, which indicates that these companies have more financial restraints. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

Effect of the Number of Banking Relationships on Credit Availability: Evidence from Panel Data of Spanish Small Firms

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Publisher
Springer US
Copyright
Copyright © 2006 by Springer
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
D.O.I.
10.1007/s11187-005-6704-z
Publisher site
See Article on Publisher Site

Abstract

This paper investigates how the choice between single or multiple banking relationships affects credit availability for a complete panel of small and medium-sized Spanish firms. The results seem to indicate the existence of rationing, since a substitution relation has been found between trade and bank credit. We also analyse the relationship between the level of indebtedness and the interest rate for each group of firms. The results show that those SMEs that work with fewer financial intermediaries obtain fewer funds for the same increase in the interest rate, which indicates that these companies have more financial restraints.

Journal

Small Business EconomicsSpringer Journals

Published: Oct 25, 2006

References

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