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Do firm–bank ‘odd couples’ exacerbate credit rationing?

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  • Ferri, Giovanni
  • Murro, Pierluigi

Abstract

This paper tests the impact of an imperfect firm–bank type match on firms’ financial constraints using a dataset of about 4500 Italian manufacturing firms. Considering an optimal match of opaque (transparent) borrowing firms with relational (transactional) lending main banks, the possibility arises of firm–bank “odd couples” where opaque firms end up matched with transactional main banks. We show that the probability of credit rationing increases when the mismatch between firms and banks widens. Our conjecture is that “odd couples” emerge either because of organizational changes in the credit market or since firms observe only imperfectly banks’ lending technology.

Suggested Citation

  • Ferri, Giovanni & Murro, Pierluigi, 2015. "Do firm–bank ‘odd couples’ exacerbate credit rationing?," Journal of Financial Intermediation, Elsevier, vol. 24(2), pages 231-251.
  • Handle: RePEc:eee:jfinin:v:24:y:2015:i:2:p:231-251
    DOI: 10.1016/j.jfi.2014.09.002
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    More about this item

    Keywords

    Bank–firm relationships; Asymmetric information; Credit rationing;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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