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Multiple Banking Relationships And Over‐Leverage In Italian Manufacturing Firms

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  • STEFANIA COSCI
  • VALENTINA MELICIANI

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.

Suggested Citation

  • Stefania Cosci & Valentina Meliciani, 2006. "Multiple Banking Relationships And Over‐Leverage In Italian Manufacturing Firms," Manchester School, University of Manchester, vol. 74(s1), pages 78-92, September.
    • Handle: RePEc:bla:manchs:v:74:y:2006:i:s1:p:78-92
    DOI: 10.1111/j.1467-9957.2006.00518.x
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    1. Roberto Guida & Valentina Sabato, 2017. "Relationship Lending and Firms’ Leverage: Empirical Evidence in Europe," European Financial Management, European Financial Management Association, vol. 23(4), pages 807-835, September.
    2. Refait-Alexandre, Catherine & Serve, Stéphanie, 2020. "Multiple banking relationships: Do SMEs mistrust their banks?," Research in International Business and Finance, Elsevier, vol. 51(C).
    3. 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.
    4. Annamaria Nifo & Sabrina Ruberto & Gaetano Vecchione, 2018. "Does institutional quality matter for lending relationships?," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 8(2), pages 1-4.
    5. Stefania Cosci & Roberto Guida & Valentina Meliciani, 2015. "Leasing Decisions and Credit Constraints: Empirical Analysis on a Sample of Italian Firms," European Financial Management, European Financial Management Association, vol. 21(2), pages 377-398, March.
    6. repec:spt:apfiba:v::y:2018:i::f:8_2_4 is not listed on IDEAS
    7. 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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