Do Firm-Bank 'Odd Couples' Exacerbate Credit Rationing?

47 Pages Posted: 31 May 2011 Last revised: 10 Dec 2014

See all articles by Giovanni Ferri

Giovanni Ferri

LUMSA University

Pierluigi Murro

LUISS Guido Carli University - Department of Business and Management

Date Written: September 1, 2014

Abstract

This paper tests the impact of an imperfect firm-bank type match on firms' financial constraints using a dataset of about 4,500 Italian manufacturing firms. Considering an optimal match of opaque (transparent) borrowing firms with relational (transactional) lending main banks, the possibility arises of firm-bank "odd couples" where opaque firms end up matched with transactional main banks. We show that the probability of credit rationing increases when the mismatch between firms and banks widens. Our conjecture is that "odd couples" emerge either because of organizational changes in the credit market or since firms observe only imperfectly banks' lending technology.

Keywords: Relationship Banking, Credit Rationing and Asymmetric Information

JEL Classification: G21, D84

Suggested Citation

Ferri, Giovanni and Murro, Pierluigi, Do Firm-Bank 'Odd Couples' Exacerbate Credit Rationing? (September 1, 2014). Journal of Financial Intermediation, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1855848 or http://dx.doi.org/10.2139/ssrn.1855848

Giovanni Ferri

LUMSA University ( email )

Via della Traspontina
Roma, Rome 00192
Italy

HOME PAGE: http://www.lumsa.it/giovanni-ferri

Pierluigi Murro (Contact Author)

LUISS Guido Carli University - Department of Business and Management ( email )

Via Salvini, 3
Rome, 00198
Italy

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