Bank Credit and Market-based Finance for Corporations: The Effects of Minibond Issuances for Unlisted Firms
110 Pages Posted: 9 Nov 2020 Last revised: 18 Aug 2023
Date Written: November 8, 2020
Abstract
Does a diversification of funding sources affect the financing conditions for firms? To answer this question, we study a regulatory reform which allows unlisted firms to issue minibonds. Using the Italian Credit Register, we compare new loans granted to issuer firms with concurrent new loans to matched non-issuer firms. We find that, after the first minibond issuance, issuer firms obtain lower interest rates on bank loans of the same maturity than non-issuers. Issuer firms reduce their used bank credit but increase their overall external funds, pointing to a partial credit substitution. Moreover, issuer firms expand their total and fixed assets.
Keywords: Bank Credit, Capital Markets, Minibonds, Loan Pricing, SME Finance.
JEL Classification: G21, G23, G32, G38
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