Firm Failure and Relationship Lending:New Evidence from Small Businesses
AbstractWe study the effect of relationship lending on small firms failure probability using a uniquely rich data set comprised of information on individual loans of a large number of small firms in Colombia. We control for firm-specific variables and find that small firms involved in long-term liaisons with commercial banks have a significantly lower probability of becoming bankrupt than otherwise identical firms not involved in a long-term credit relationship. We also find that small firms with multiple banking relationships face a lower failure hazard than otherwise identical firms involved in a unique long-term relationship.
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Bibliographic InfoPaper provided by Banco de la Republica de Colombia in its series Borradores de Economia with number 638.
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Firms; bank relationships; survival analysis. Classification JEL: G20; G21; C40.;
Other versions of this item:
- José Eduardo Gómez-González & Nidia Ruth Reyes, 2011. "Firm Failure and Relationship Lending: New Evidence from Small Businesses," BORRADORES DE ECONOMIA 007873, BANCO DE LA REPÚBLICA.
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- C40 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - General
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- von Thadden, Ernst-Ludwig, 2004.
"Asymmetric information, bank lending and implicit contracts: the winner's curse,"
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- Ernst-Ludwig VON THADDEN, 1998. "Asymmetric Information, Bank Lending and Implicit Contracts : The Winner's Curse," Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP), UniversitÃ© de Lausanne, FacultÃ© des HEC, DEEP 9809, Université de Lausanne, Faculté des HEC, DEEP.
- Gómez-González, José Eduardo & Reyes, Nidia Ruth, 2011. "The number of banking relationships and the business cycle: New evidence from Colombia," Economic Systems, Elsevier, Elsevier, vol. 35(3), pages 408-418, September.
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