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Bank–firm relations and the role of Mutual Guarantee Institutions at the peak of the crisis

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  • Bartoli, Francesca
  • Ferri, Giovanni
  • Murro, Pierluigi
  • Rotondi, Zeno

Abstract

We examine the role played by Mutual Guarantee Institutions (MGIs) in the lending policies undertaken by banks at the peak of the Great Crisis of 2007–2009. We address this issue by using a large database on Italian firms built from the credit files of UniCredit banking Group and focusing on small business. We provide an empirical analysis of the determinants of the probability that a borrowing firm will suffer financial tension and obtain two main innovative findings. First, we find that small firms supported by MGIs less likely experienced financial tensions even at that time of utmost financial stress. Second, our empirical evidence shows that MGIs played a signaling role beyond the simple provision of collateral. This latter finding suggests that the information provided by MGIs turned out to be key for bank–firm relations as scoring and rating systems – being typically based on pro-cyclical indicators – had become less informative during the crisis.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Financial Stability.

Volume (Year): 9 (2013)
Issue (Month): 1 ()
Pages: 90-104

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Handle: RePEc:eee:finsta:v:9:y:2013:i:1:p:90-104

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Web page: http://www.elsevier.com/locate/jfstabil

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Keywords: Financial crisis; Bank–firm relationships; Asymmetric information; Credit guarantee schemes; Small business finance; Peer monitoring;

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References

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Citations

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Cited by:
  1. Zeno Rotondi, 2013. "Relationship banking and organizational models: a new structure for UniCredit Group in Italy," BANCARIA, Bancaria Editrice, vol. 4, pages 15-23, April.
  2. Bartoli, Francesca & Ferri, Giovanni & Murro, Pierluigi & Rotondi, Zeno, 2013. "SME financing and the choice of lending technology in Italy: Complementarity or substitutability?," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 5476-5485.
  3. Fábián, Gergely & Fáykiss, Péter & Szigel, Gábor, 2012. "Toolkit for stimulating corporate lending," MPRA Paper 40336, University Library of Munich, Germany.
  4. Francesca Bartoli & Giovanni Ferri & Pierluigi Murro & Zeno Rotondi, 2012. "SME Financing and the Choice of Lending Technology in Italy: Complementarity or Substitutability?," Working Papers CASMEF 1212, Dipartimento di Economia e Finanza, LUISS Guido Carli.
  5. Paolo Emilio Mistrulli & Valerio Vacca & Gennaro Corbisiero & Silvia del Prete & Luciano Esposito & Marco Gallo & Mariano Graziano & Maurizio Lozzi & Vincenzo Maffione & Daniele Marangoni & Andrea Mig, 2011. "Mutual Guarantee Institutions (MGIs) and small business credit during the crisis," Questioni di Economia e Finanza (Occasional Papers) 105, Bank of Italy, Economic Research and International Relations Area.
  6. Clara Cardone-Riportella & Antonio Trujillo-Ponce & Anahí Briozzo, 2013. "Analyzing the role of mutual guarantee societies on bank capital requirements for small and medium-sized enterprises," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 16(2), pages 142-159, June.
  7. Ansgar Belke, 2013. "Finance Access of SMEs: What Role for the ECB?," Ruhr Economic Papers 0430, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  8. Francesca Bartoli & Giovanni Ferri & Pierluigi Murro & Zeno Rotondi, 2014. "Bank support and export: evidence from small Italian firms," Small Business Economics, Springer, vol. 42(2), pages 245-264, February.
  9. Yoram Kroll & Assaf Cohen, 2013. "Optimum pricing of mutual guarantees for credit," Small Business Economics, Springer, vol. 41(1), pages 253-262, June.

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