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Bank-firm relations and the role of Mutual Guarantee Institutions during the crisis

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  • Francesca Bartoli

    ()
    (UniCredit Group)

  • Giovanni Ferri

    ()
    (University of Bari)

  • Pierluigi Murro

    ()
    (University of Bari)

  • Zeno Rotondi

    ()
    (Unicredit Group)

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 show that small firms supported by MGIs were less likely to experience financial tensions even at that time of utmost financial stress. Second, our empirical evidence shows that MGIs have played a signalling role beyond the simple provision of a 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

Paper provided by Dipartimento di Scienze Economiche e Metodi Matematici - Università di Bari in its series series with number 0034.

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Length: 924
Date of creation: Jan 2011
Date of revision: Jan 2011
Handle: RePEc:bai:series:wp0034

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Keywords: financial crisis; bank-firm relationships; asymmetric information; credit guarantee schemes; small business finance; peer monitoring;

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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, Bancaria Editrice, vol. 4, pages 15-23, April.
  2. Fábián, Gergely & Fáykiss, Péter & Szigel, Gábor, 2012. "Toolkit for stimulating corporate lending," MPRA Paper 40336, University Library of Munich, Germany.
  3. 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, Taylor & Francis Journals, vol. 16(2), pages 142-159, June.
  4. 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.
  5. Ansgar Belke & Florian Verheyen, 2013. "Finance Access of SMEs: What Role for the ECB?," ROME Working Papers, ROME Network 201311, ROME Network.
  6. Yoram Kroll & Assaf Cohen, 2013. "Optimum pricing of mutual guarantees for credit," Small Business Economics, Springer, Springer, vol. 41(1), pages 253-262, June.
  7. 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, Dipartimento di Economia e Finanza, LUISS Guido Carli 1212, Dipartimento di Economia e Finanza, LUISS Guido Carli.
  8. Francesca Bartoli & Giovanni Ferri & Pierluigi Murro & Zeno Rotondi, 2014. "Bank support and export: evidence from small Italian firms," Small Business Economics, Springer, Springer, vol. 42(2), pages 245-264, February.

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