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Multiple banking Relationships and Over-Leverage in Italian Manufacturing Firms

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  • Valentina Meliciani

    (University of Teramo)

  • Stefania Cosci

    (LUMSA University of Rome)

Abstract

The purpose of this paper is to shed more light on the determinants of the number of bank lending relationships. In particular we look at the link between over-leverage and the number of banking relationships for a sample of Italian manufacturing firms, distinguishing between firms with a main bank and firms without a main bank. The main result of the paper is that the number of banking relationships increases with over-leverage only for firms without a main bank. We argue that this result is consistent with the view that, when banks perform transaction lending, firms can increase their debt capacity by increasing the number of creditors, promising ex ante up to the full amount of available assets to each one of the creditors. Copyright � 2006 The Authors; Journal compilation � 2006 Blackwell Publishing Ltd and The University of Manchester.

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Bibliographic Info

Paper provided by Money Macro and Finance Research Group in its series Money Macro and Finance (MMF) Research Group Conference 2005 with number 87.

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Date of creation: 03 Sep 2005
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Handle: RePEc:mmf:mmfc05:87

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Web page: http://www.essex.ac.uk/afm/mmf/index.html

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Cited by:
  1. Vigneron, Ludovic & Hajj Chehade, Hiba, 2013. "Structuration du pool bancaire de la PME : une revue de la littérature
    [Structuring SMEs' banks relationships: a review]
    ," MPRA Paper 50498, University Library of Munich, Germany.
  2. Yu, Hai-Chin & Sopranzetti, Ben J. & Lee, Cheng-Few, 2012. "Multiple banking relationships, managerial ownership concentration and firm value: A simultaneous equations approach," The Quarterly Review of Economics and Finance, Elsevier, vol. 52(3), pages 286-297.

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