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Relationships and the availability of credit to New Small Firms

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We analyze the loans that startup firms obtain from banks by testing our predictions on a set of small, young Italian companies founded during the 1992-2004 period. According to our investigation, the amount of borrowing is determined by (1) the size of the firm, (2), the ability to offer collateral (3) perceived risk. Contrary to expectations, however, the length of the relationship with the lender has a weak influence.

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Paper provided by University of Haifa, Department of Economics in its series Working Papers with number WP2011/11.

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Length: 21
Date of creation:
Date of revision: 23 Oct 2011
Handle: RePEc:haf:huedwp:wp201111

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  1. Nilsen, Jeffrey H, 2002. "Trade Credit and the Bank Lending Channel," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 34(1), pages 226-53, February.
  2. Aoife Hanley & Sourafel Girma, 2006. "New Ventures and their Credit Terms," Small Business Economics, Springer, Springer, vol. 26(4), pages 351-364, 05.
  3. Riding, Allan L. & HainesJR., George, 2001. "Loan guarantees: Costs of default and benefits to small firms," Journal of Business Venturing, Elsevier, vol. 16(6), pages 595-612, November.
  4. Bianco, Magda & Casavola, Paola, 1999. "Italian corporate governance:: Effects on financial structure and firm performance," European Economic Review, Elsevier, Elsevier, vol. 43(4-6), pages 1057-1069, April.
  5. Michael Manove & A. Jorge Padilla & Marco Pagano, 1998. "Collateral vs. Project Screening: A Model of Lazy Banks," CSEF Working Papers, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy 10, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  6. Arito Ono & Iichiro Uesugi, 2009. "Role of Collateral and Personal Guarantees in Relationship Lending: Evidence from Japan's SME Loan Market," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 41(5), pages 935-960, 08.
  7. Hirofumi Uchida & Gregory F. Udell & Wako Watanabe, 2008. "Bank size and lending relationships in Japan," NBER Chapters, in: Organizational Innovation and Firm Performance, pages 242-267 National Bureau of Economic Research, Inc.
  8. Giannetti, Mariassunta, 2003. " Bank-Firm Relationships and Contagious Banking Crises," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 35(2), pages 239-61, April.
  9. Stanley D. Longhofer & João A.C. Santos, 1998. "The importance of bank seniority for relationship lending," Working Paper 9808, Federal Reserve Bank of Cleveland.
  10. Howard Bodenhorn, 2001. "Short-Term Loans and Long-Term Relationships: Relationship Lending in Early America," NBER Historical Working Papers, National Bureau of Economic Research, Inc 0137, National Bureau of Economic Research, Inc.
  11. Craig, Steven G. & Hardee, Pauline, 2007. "The impact of bank consolidation on small business credit availability," Journal of Banking & Finance, Elsevier, Elsevier, vol. 31(4), pages 1237-1263, April.
  12. Becchetti, Leonardo & Trovato, Giovanni, 2002. " The Determinants of Growth for Small and Medium Sized Firms: The Role of the Availability of External Finance," Small Business Economics, Springer, Springer, vol. 19(4), pages 291-306, December.
  13. Cole, Rebel, 2008. "What do we know about the capital structure of privately held firms? Evidence from the Surveys of Small Business Finance," MPRA Paper 8086, University Library of Munich, Germany.
  14. Manove, Michael & Padilla, A Jorge & Pagano, Marco, 2001. "Collateral versus Project Screening: A Model of Lazy Banks," RAND Journal of Economics, The RAND Corporation, vol. 32(4), pages 726-44, Winter.
  15. Rajan, Raghuram & Winton, Andrew, 1995. " Covenants and Collateral as Incentives to Monitor," Journal of Finance, American Finance Association, American Finance Association, vol. 50(4), pages 1113-46, September.
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