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Relationship lending and the use of trade credit: the role of relational capital and private information

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  • Pierluigi Murro

    (LUISS University)

  • Valentina Peruzzi

    (LUISS University)

Abstract

Using a unique sample of Italian manufacturing firms, we investigate the impact of relationship lending on firms' use of trade credit. We find that firms with close and long-lasting relationships with their main bank obtain higher amounts of trade credit. This result is robust to alternative definitions of trade credit and relationship lending, and to different estimation techniques. This positive link is especially strong for firms that use to provide soft information to their lenders and for companies with greater abilities to create valuable relationships with business parties.

Suggested Citation

  • Pierluigi Murro & Valentina Peruzzi, 2020. "Relationship lending and the use of trade credit: the role of relational capital and private information," Working Papers CASMEF 2006, Dipartimento di Economia e Finanza, LUISS Guido Carli.
    • Handle: RePEc:lui:casmef:2006
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    More about this item

    Keywords

    Trade credit; relationship lending; soft information;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • 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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