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Effect of the Number of Banking Relationships on Credit Availability: Evidence from Panel Data of Spanish Small Firms

  • Ginés Hernández-Cánovas

    ()

  • Pedro Martínez-Solano

    ()

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    This paper investigates how the choice between single or multiple banking relationships affects credit availability for a complete panel of small and medium-sized Spanish firms. The results seem to indicate the existence of rationing, since a substitution relation has been found between trade and bank credit. We also analyse the relationship between the level of indebtedness and the interest rate for each group of firms. The results show that those SMEs that work with fewer financial intermediaries obtain fewer funds for the same increase in the interest rate, which indicates that these companies have more financial restraints. Copyright Springer 2007

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    File URL: http://hdl.handle.net/10.1007/s11187-005-6704-z
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    Article provided by Springer in its journal Small Business Economics.

    Volume (Year): 28 (2007)
    Issue (Month): 1 (January)
    Pages: 37-53

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    Handle: RePEc:kap:sbusec:v:28:y:2007:i:1:p:37-53
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