Abstract

http://ssrn.com/abstract=295379
 
 

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Small Business Credit Availability and Relationship Lending: The Importance of Bank Organisational Structure


Allen N. Berger


University of South Carolina - Moore School of Business; Wharton Financial Institutions Center; European Banking Center

Gregory F. Udell


Indiana University - Kelley School of Business - Department of Finance


Economic Journal, Forthcoming

Abstract:     
This paper models the inner workings of relationship lending, the implications for bank organizational structure, and the effects of shocks to the economic environment on the availability of relationship credit to small businesses. Relationship lending depends on the accumulation over time by the loan officer of "soft" information. Because the loan officer is the repository of this soft information, agency problems are created throughout the organization that are best resolved by structuring the bank as a small, closely-held organization with few managerial layers. The shocks analyzed include technological innovations, regulatory regime shifts, banking industry consolidation, and monetary policy shocks.

Keywords: Banks, small business, mergers, relationship lending, organisational structure

JEL Classification: G21, G28, G34, L23

Accepted Paper Series





Not Available For Download

Date posted: January 3, 2002  

Suggested Citation

Berger, Allen N. and Udell, Gregory F., Small Business Credit Availability and Relationship Lending: The Importance of Bank Organisational Structure. Economic Journal, Forthcoming. Available at SSRN: http://ssrn.com/abstract=295379

Contact Information

Allen N. Berger (Contact Author)
University of South Carolina - Moore School of Business ( email )
1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States
803-576-8440 (Phone)
803-777-6876 (Fax)
Wharton Financial Institutions Center
Philadelphia, PA 19104-6367
United States
European Banking Center
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
Gregory F. Udell
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States

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