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Differentiated Use of Small Business Credit Scoring by Relationship Lenders and Transactional Lenders: Evidence from Firm-Bank Matched Data in Japan

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  • Hasumi, Ryo
  • Hirata, Hideaki
  • Ono, Arito

Abstract

This paper examines the ex-post performance of small and medium enterprises (SMEs) that obtained small business credit scoring (SBCS) loans by using a unique Japanese firm-bank matched dataset. The ex-post probability of default after the SBCS loan was provided significantly increased for SMEs that obtained an SBCS loan from a transactional lender. Also, the lending attitude of relationship lenders during the recent global financial crisis was more severe if a transactional lender had extended an SBCS loan to a firm. These findings suggest that SBCS loans by a transactional lender are detrimental to a relationship lender’s incentive to monitor SMEs and maintain relationships.

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Bibliographic Info

Paper provided by Center for Interfirm Network, Institute of Economic Research, Hitotsubashi University in its series Working Paper Series with number 23.

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Length: 55 p.
Date of creation: Dec 2012
Date of revision:
Handle: RePEc:hit:cinwps:23

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Keywords: small business credit scoring; lending technology; relationship lending;

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References

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Cited by:
  1. Ono, Arito & Uesugi, Iichiro, 2014. "SME Financing in Japan during the Global Financial Crisis: Evidence from Firm Surveys," HIT-REFINED Working Paper Series, Institute of Economic Research, Hitotsubashi University 6, Institute of Economic Research, Hitotsubashi University.

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