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 REPÚBLICA in its series BORRADORES DE ECONOMIA with number 007873.
Date of creation: 23 Jan 2011
Date of revision:
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Firms; bank relationships; survival analysis.;
Other versions of this item:
- José Eduardo Gómez-González & Nidia Ruth Reyes, . "Firm Failure and Relationship Lending:New Evidence from Small Businesses," Borradores de Economia 638, Banco de la Republica de Colombia.
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-02-05 (All new papers)
- NEP-BAN-2011-02-05 (Banking)
- NEP-BEC-2011-02-05 (Business Economics)
- NEP-ENT-2011-02-05 (Entrepreneurship)
- NEP-SBM-2011-02-05 (Small Business Management)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gómez-González, José Eduardo & Reyes, Nidia Ruth, 2011. "The number of banking relationships and the business cycle: New evidence from Colombia," Economic Systems, Elsevier, vol. 35(3), pages 408-418, September.
- von Thadden, Ernst-Ludwig, 2004.
"Asymmetric information, bank lending and implicit contracts: the winner's curse,"
Finance Research Letters,
Elsevier, vol. 1(1), pages 11-23, March.
- 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) 9809, Université de Lausanne, Faculté des HEC, DEEP.
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