Firm Failure and Relationship Lending: New Evidence from Small Businesses
We study the effect of relationship lending on small firms´ failure probability using a uniquely rich data set comprised of information on individual loans of a large number of small firms in Colombia. We control for firm-specific variables and find that small firms involved in long-term liaisons with commercial banks have a significantly lower probability of becoming bankrupt than otherwise identical firms not involved in a long-term credit relationship. We also find that small firms with multiple banking relationships face a lower failure hazard than otherwise identical firms involved in a unique long-term relationship.
|Date of creation:||23 Jan 2011|
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- von Thadden, Ernst-Ludwig, 2004.
"Asymmetric information, bank lending and implicit contracts: the winner's curse,"
Finance Research Letters,
Elsevier, vol. 1(1), pages 11-23, March.
- Ernst-Ludwig VON THADDEN, 1998. "Asymmetric Information, Bank Lending and Implicit Contracts : The Winner's Curse," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9809, Université de Lausanne, Faculté des HEC, DEEP.
- Gómez-González, José Eduardo & Reyes, Nidia Ruth, 2011. "The number of banking relationships and the business cycle: New evidence from Colombia," Economic Systems, Elsevier, vol. 35(3), pages 408-418, September. Full references (including those not matched with items on IDEAS)
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