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Do Firms Benefit from Multiple Banking Relationships?: Evidence from Small and Medium-Sized Firms in Japan

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  • Masayo Shikimi (Tomiyama)

Abstract

This paper examines empirically the effects of multiple banking relationships on the cost and availability of credit. The analysis is based on an unbalanced panel data set for Japanese small and medium-sized firms over the period 2000-2002. The Hausman-Taylor estimator is used to allow for possible correlation between unobservable heterogeneity among firms and multiple banking relationships. The results suggest that the cost of credit is positively correlated with the number of banking relationships when the endogeneity of the banking relationships is considered. Multiple banking relationships have a positive effect on the availability of credit for financially constrained firms.

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  • Masayo Shikimi (Tomiyama), 2005. "Do Firms Benefit from Multiple Banking Relationships?: Evidence from Small and Medium-Sized Firms in Japan," Hi-Stat Discussion Paper Series d04-70, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hst:hstdps:d04-70
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    Cited by:

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    3. Kano, Masaji & Uchida, Hirofumi & Udell, Gregory F. & Watanabe, Wako, 2011. "Information verifiability, bank organization, bank competition and bank-borrower relationships," Journal of Banking & Finance, Elsevier, vol. 35(4), pages 935-954, April.
    4. Kremp, Elizabeth & Sevestre, Patrick, 2013. "Did the crisis induce credit rationing for French SMEs?," Journal of Banking & Finance, Elsevier, vol. 37(10), pages 3757-3772.
    5. Andrea Fracasso & Valentina Peruzzi & Chiara Tomasi, 2024. "Multiple banking relationships: the role of firm connectedness," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 33(5), pages 1231-1252.
    6. Sergey A. Chunikhin & Evgeny A. Kuzmin & Luidmila V. Pushkareva, 2019. "Studying the banking industry’s stability through market concentration indices," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 6(4), pages 1663-1679, June.
    7. Djedidi-Kooli, Salima, 2009. "L’accès au financement des PME en France : quel rôle joué par la structure du système bancaire ?," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/8354 edited by Etner, François.
    8. Kenshi Taketa & Gregory F. Udell, 2007. "Lending Channels and Financial Shocks: The Case of Small and Medium-Sized Enterprise Trade Credit and the Japanese Banking Crisis," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 25(2), pages 1-44, November.
    9. Tumer-Alkan, G., 2008. "Essays on banking," Other publications TiSEM 8d5ec521-4702-4e75-bc79-a, Tilburg University, School of Economics and Management.
    10. Mohamed Oudgou & Abdeslam Boudhar, 2023. "The bank–SME relationship and rationing risk reduction: an empirical study on survey data," SN Business & Economics, Springer, vol. 3(8), pages 1-39, August.
    11. Annie bellier & Wafa Sayeh & Stéphanie Serve, 2012. "What lies behind credit rationing? A survey of the literature," THEMA Working Papers 2012-39, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    12. Farinha, Luísa & Félix, Sónia, 2015. "Credit rationing for Portuguese SMEs," Finance Research Letters, Elsevier, vol. 14(C), pages 167-177.
    13. Lorenzo Burlon & Davide Fantino & Andrea Nobili & Gabriele Sene, 2016. "The quantity of corporate credit rationing with matched bank-firm data," Temi di discussione (Economic working papers) 1058, Bank of Italy, Economic Research and International Relations Area.
    14. Santiago Carbó-Valverde & Francisco Rodríguez-Fernández & Gregory F. Udell, 2008. "Bank lending, financing constraints and SME investment," Working Paper Series WP-08-04, Federal Reserve Bank of Chicago.
    15. Sugato Chakravarty & Tansel Yilmazer, 2009. "A Multistage Model of Loans and the Role of Relationships," Financial Management, Financial Management Association International, vol. 38(4), pages 781-816, December.

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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