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Do Firm-Bank `Odd Couples' Exacerbate Credit Rationing?

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Author Info

  • Giovanni Ferri

    ()
    (University of Bari)

  • Pierluigi Murro

    ()
    (University of Bari)

  • Zeno Rotondi

    (UniCredit Group's Retail Research Division)

Abstract

We start considering an optimal matching of opaque (transparent) borrowing firrms with relational (transactional) lending main banks. Next we contemplate the possibility that firm-bank "odd couples" materialize where opaque (transparent) firrms end up matched with transactional (re- lational) main banks. We conjecture the "odd couples" emerge either since the bank's lending technology is not perfectly observable to the rm or because riskier firrms - even though opaque - strategically select transac- tional banks in the hope of being classified as lower risks. Our econometric results show the probability of rationing is larger when firrms and banks match in "odd couples".

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Bibliographic Info

Paper provided by Dipartimento di Scienze Economiche e Metodi Matematici - Università di Bari in its series series with number 0031.

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Length: 883
Date of creation: Jul 2010
Date of revision: Jul 2010
Handle: RePEc:bai:series:wp0031

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Keywords: Relationship Banking; Credit Rationing and Asymmetric Information;

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