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Relationships and The Availability of Credit To New Small Firms

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  • Colombatto, Enrico

    ()

  • Melnik, Arie

    ()

  • Monticone, Chiara

    ()

Abstract

We analyze the loans that small, newly established firms obtain from the banks by certain relationships based on a set of small, young Italian companies founded during the 1992–2004 period. According to our investigation, the amount of borrowing is determined primarily by the size of the firm, and the ability to offer collateral. Contrary to expectations, however perceived risk has a weak influence. The length of relationship influences borrowing in a non linear way.

Suggested Citation

  • Colombatto, Enrico & Melnik, Arie & Monticone, Chiara, 2011. "Relationships and The Availability of Credit To New Small Firms," IEL Working Papers 6, Institute of Public Policy and Public Choice - POLIS.
  • Handle: RePEc:uca:ucaiel:6
    as

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    File URL: http://polis.unipmn.it/pubbl/RePEc/uca/ucaiel/iel006.pdf
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    References listed on IDEAS

    as
    1. Riding, Allan L. & HainesJR., George, 2001. "Loan guarantees: Costs of default and benefits to small firms," Journal of Business Venturing, Elsevier, vol. 16(6), pages 595-612, November.
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    More about this item

    Keywords

    young firms; bank loans; collateral; relationships;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • 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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