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

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  • Ginés Hernández-Cánovas

    ()

  • Pedro Martínez-Solano

    ()

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    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. Copyright Springer 2007

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    Bibliographic Info

    Article provided by Springer in its journal Small Business Economics.

    Volume (Year): 28 (2007)
    Issue (Month): 1 (January)
    Pages: 37-53

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    Handle: RePEc:kap:sbusec:v:28:y:2007:i:1:p:37-53

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    Web page: http://www.springerlink.com/link.asp?id=100338

    Related research

    Keywords: banking relationships; asymmetric information; small business; panel data; interest rate and credit rationing; G21; G24; G32;

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    Cited by:
    1. Damiano Bonardo & Stefano Paleari & Silvio Vismara, 2010. "The M&A dynamics of European science-based entrepreneurial firms," The Journal of Technology Transfer, Springer, vol. 35(1), pages 141-180, February.
    2. Martin Boyer, M. & Gobert, Karine, 2009. "The impact of switching costs on vendor financing," Finance Research Letters, Elsevier, vol. 6(4), pages 236-241, December.
    3. Zambaldi, Felipe & Aranha, Francisco & Lopes, Hedibert & Politi, Ricardo, 2011. "Credit granting to small firms: A Brazilian case," Journal of Business Research, Elsevier, vol. 64(3), pages 309-315, March.
    4. Tensie Steijvers & Wim Voordeckers & Koen Vanhoof, 2010. "Collateral, relationship lending and family firms," Small Business Economics, Springer, vol. 34(3), pages 243-259, April.

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