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Bank Size or Distance: What Hampers Innovation Adoption by SMEs ?

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  • Pietro ALESSANDRINI

    () (Universita' Politecnica delle Marche, Dipartimento di Economia)

  • Andrea PRESBITERO

    () (Universita' Politecnica delle Marche, Dipartimento di Economia)

  • Alberto ZAZZARO

    () (Universita' Politecnica delle Marche, Dipartimento di Economia)

Abstract

A growing body of research focuses on banking organizational issues, emphasizing the culties encountered by hierarchically organized banks in lending to borrowers/projects with high intensity of soft information. However, as the two extreme cases of hierarchical and non-hierarchical organizations are typically contrasted, what actually shapes the degree of hierarchy and how to measure it remain fairly vague. In this paper we compare bank size and distance between bank's branches and headquarter as possible sources of organizational frictions. In particular, we study the impact of distance and bank size on the firms' likelihood of introducing innovations and financing constraints on a sample of Italian SMEs. Our results show that firms located in provinces where the local banking system is functionally distant are less inclined to introduce innovations and are more likely to be credit rationed. Conversely, we find that the market share of large banks is only rarely statistically significant and when it is, the economic impact on the probability of introducing innovation and credit rationing is appreciably smaller than that of functional distance.

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Bibliographic Info

Paper provided by Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali in its series Working Papers with number 304.

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Length: 28
Date of creation: Nov 2007
Date of revision:
Handle: RePEc:anc:wpaper:304

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Keywords: Bank Size; Functional Distance; Innovation; SMEs;

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References

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Citations

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Cited by:
  1. Presbitero, Andrea F. & Zazzaro, Alberto, 2011. "Competition and relationship lending: Friends or foes?," Journal of Financial Intermediation, Elsevier, vol. 20(3), pages 387-413, July.
  2. Tlili, Rim, 2012. "Comment justifier la multibancarité au sein des PME ?," Open Access publications from Université Paris-Dauphine urn:hdl:123456789/10919, Université Paris-Dauphine.
  3. Angelo Secchi & Federico Tamagni & Chiara Tomasi, 2011. "Exporting under financial constraints: margins, switching dynamics and prices," LEM Papers Series 2011/24, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  4. Djedidi-Kooli, Salima, 2009. "L’accès au financement des PME en France : quel rôle joué par la structure du système bancaire ?," Open Access publications from Université Paris-Dauphine urn:hdl:123456789/8354, Université Paris-Dauphine.
  5. Massimiliano Bratti & Giulia Felice, 2011. "Are Exporters More Likely to Introduce Product Innovations?," Development Working Papers 306, Centro Studi Luca d\'Agliano, University of Milano, revised 09 May 2011.
  6. Giannetti, C., 2009. "Relationship Lending and Firm Innovativeness," Discussion Paper 2009-08, Tilburg University, Center for Economic Research.
  7. Alessandro STERLACCHINI & Francesco VENTURINI, 2007. "Boosting Manufacturing Productivity Through R&D: International Comparisons with Special Focus on Italy," Working Papers 306, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  8. Pietro Alessandrini & Andrea Filippo Presbitero & Alberto Zazzaro, 2008. "Global Banking and Local Markets," Mo.Fi.R. Working Papers 4, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  9. Andrea Filippo Presbitero & Gregory F. Udell & Alberto Zazzaro, 2012. "The Home Bias and the Credit Crunch: A Regional Perspective," Mo.Fi.R. Working Papers 60, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  10. Andrea Filippo Presbitero & Roberta Rabellotti, 2012. "Geographical Distance and Moral Hazard in Microcredit: Evidence from Colombia," Mo.Fi.R. Working Papers 58, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  11. Pietro Alessandrini & Andrea Filippo Presbitero, 2009. "La Nuova Geografia Bancaria nel Mezzogiorno: la Necessita' di un Approccio Sistemico," Mo.Fi.R. Working Papers 10, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.

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