Advanced Search
MyIDEAS: Login to save this paper or follow this series

The European Institutional Environment and SME Relationship Lending: Should We Care?


Author Info

  • Hernandez-Canovas, Gines

    (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics)

  • Koeter-Kant, Johanna
Registered author(s):


    This paper examines the impact of country specific determinants on multiple banking using a unique survey sample of 4959 SMEs from 19 European countries. Our data shows that (1) SMEs in countries with inefficient loan enforcement mechanisms are more likely to maintain multiple bank relationships, (2) the association between multiple banking and bank fragility is non-monotonous, being negative when the banking system is relatively stable and positive for high values of bank fragility, and (3) multiple banking is more likely for SMEs in countries with larger banking systems as well as smaller and less active securities markets. Overall, this evidence suggests that SMEs need multiple banking as a diversification mechanism to overcome expensive adverse selection that may arise within a country that suffers from an inefficient legal system and fragile banks, but also that movement towards a more market based financial system decreases the likelihood of multiple bank relationships for SMEs. These findings have important implications for policy makers in Europe when contemplating SME access to finance.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL:
    Our checks indicate that this address may not be valid because: 500 Failed to connect to FTP server Net::FTP: Bad hostname ''. If this is indeed the case, please notify (R. Dam)
    Download Restriction: no

    Bibliographic Info

    Paper provided by VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics in its series Serie Research Memoranda with number 0019.

    as in new window
    Date of creation: 2006
    Date of revision:
    Handle: RePEc:dgr:vuarem:2006-19

    Contact details of provider:
    Web page:

    Related research

    Keywords: SMEs; Relationship Lending; Banks;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:


    No references listed on IDEAS
    You can help add them by filling out this form.



    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.


    Access and download statistics


    When requesting a correction, please mention this item's handle: RePEc:dgr:vuarem:2006-19. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (R. Dam).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.