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Bank Organization and Loan Contracting in Small Business Financing

Author

Listed:
  • Andrea Bellucci

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

  • Alexander Borisov

    (University of Cincinnati, USA and MoFiR, Italy)

  • Alberto Zazzaro

    (University of Naples Federico II, Polytechnic University of Marche, Finance Research Group (MoFiR) and CSEF)

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. JEL Classification:

Suggested Citation

  • Andrea Bellucci & Alexander Borisov & Alberto Zazzaro, 2016. "Bank Organization and Loan Contracting in Small Business Financing," CSEF Working Papers 424, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    • Handle: RePEc:sef:csefwp:424
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    References listed on IDEAS

    as
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    1. Lopomo Beteto Wegner, Danilo, 2024. "Centralized and decentralized lending: Implications of consolidation in the German banking industry," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 1051-1063.

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    Keywords

    Bank organization structure; Authority allocation; Small business financing;
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