Microenterprises and multiple bank relationships:
The case of professionals
Doris Neuberger Æ Solvig Ra
Accepted: 17 September 2007 / Published online: 27 November 2007
Ó Springer Science+Business Media, LLC. 2007
Abstract The present paper focuses on profession-
als as a special group of microenterprises. It explains
their characteristics and ﬁnancial relationships, using
data from a survey conducted in Germany in 2002.
Consistent with the theory of asymmetric information
and relationship lending, we ﬁnd that these ﬁrms
maintain a small number of bank relationships, which
increases in ﬁrm size and age. They tend to choose
multiple banking relationships to overcome credit
rationing and ﬁnance larger loans. Credit risk and
the structure of the banking market do not seem to
Keywords Bank–customer relationships Á
Multiple bank relationships Á Relationship banking Á
Small ﬁrm ﬁnance
JEL Classiﬁcations G21 Á G32 Á L14 Á L26
The number of bank relationships held by small and
medium-sized enterprises (SMEs) is one of the key
variables in the literature on relationship lending.
low number of lending banks is usually considered an
indicator of a close bank–customer relationship, which
helps to overcome credit rationing due to asymmetric
information. The information-based theory of ﬁnancial
intermediation predicts that an information-opaque
small or young ﬁrm borrows from only one to few
banks. This ‘one-to-few’ hypothesis has been con-
ﬁrmed for SME loans in several countries, but not for
the majority of countries in cross-section studies
(Ongena and Smith 2000b, Qian and Strahan 2005).
The evidence of a large cross-country variation in the
number of bank relationships with multiple banking
relationships prevailing even at small ﬁrms has
induced research on the determinants of this variable.
While in empirical studies on relationship lending the
number of bank relationships has been often treated as
an exogenous variable, recent research focuses on
explaining this number or the probability of multiple
The number of lending
D. Neuberger (&) Á S. Ra
Department of Economics, University of Rostock,
Ulmenstr. 69, Rostock D-18057, Germany
For surveys, see Boot (2000), Ongena and Smith (2000a) and
Elyasiani and Goldberg (2004).
See Ongena and Smith (2000b) and Qian and Strahan (2005)
for cross sections of countries, Guiso and Minetti (2004) for the
US, Cosci and Meliciani (2002) and Detragiache et al. (2000)
for Italy, Machauer and Weber (2000) and Harhoff and Ko
(1998b) for Germany, Ziane (2003) for France, Neuberger
et al. (2006) for Switzerland, Degryse and Ongena (2001) for
Norway, Berger et al. (2001b) for Argentina, Berger et al.
(2005) for India, Yu and Hsieh (2003) and Fok et al. (2004) for
Taiwan, and Ogawa et al. (2005) for Japan.
Small Bus Econ (2009) 32:207–229