Beyond Banks¡¯ Capitalization: What Affects the Credit Lines?

The present paper aims at investigating what affects the credit granting beyond banks¡¯capitalization. It focuses on public and private firms¡¯ information available for the banks. We apply moderating regression models on panel data. Our sample is of 123 co-operative credit banks and more than 11,000 firms operating in Italy between 2012 and 2014, for 18,143 observations. Our main findings suggest that firms¡¯ profitability (public information) positively moderates the direct relationship between banks¡¯ capitalization and credit grants; differently, multiple banking, overdue payment and credit limit violation days (private information) negatively moderate the above-cited relationship. Finally, the conjoint moderating effect of public and private information proves to be negative, thus also firms with a good profitability are penalized in credit grant whether they do not take care the relationship with banks.