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Bank Organization and Loan Contracting in Small Business Financing

Author

Listed:
  • Andrea Bellucci

    (Institute for Applied Economic Research (IAW), Germany, MoFiR, Italy)

  • Alexander Borisov

    (University of Cincinnati, USA, MoFiR, Italy)

  • Alberto Zazzaro

    () (Universit… Politecnica delle Marche, MoFiR - Ancona, Italy, CSEF, Naples, Italy)

Abstract

Academic research recognizes that the organizational structure of banks could have implications for the financing of small businesses and entrepreneurial firms. In this chapter, we start by reviewing the underlying theoretical motivation and then summarize existing evidence. Overall, it is confirmed that the organization of lending institutions is important for the use and transmission of information, as well as credit availability for small businesses. Moreover, using a unique dataset of bank loans, we empirically document that loan contract characteristics such as interest rates and collateral requirements are sensitive to the hierarchical allocation of decision-making authority within the bank's organization.

Suggested Citation

  • Andrea Bellucci & Alexander Borisov & Alberto Zazzaro, 2016. "Bank Organization and Loan Contracting in Small Business Financing," Mo.Fi.R. Working Papers 118, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  • Handle: RePEc:anc:wmofir:118
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    References listed on IDEAS

    as
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    Keywords

    Authority allocation; Bank organization structure; Small business financing;

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