SME Financing and the Choice of Lending Technology in Italy: Complementarity or Substitutability?

23 Pages Posted: 31 Jul 2012

See all articles by Francesca Bartoli

Francesca Bartoli

Assolombarda

Giovanni Ferri

LUMSA University

Pierluigi Murro

LUISS Guido Carli University - Department of Business and Management

Zeno Rotondi

UNICREDIT; LUISS Guido Carli University

Date Written: July 30, 2012

Abstract

This paper investigates SME financing in Italy. The literature distinguishes between two main different lending technologies (LTs) for SMEs: transactional and relationship LTs. We find that banks lend to SMEs by using both LTs together, independently of the size and proximity of borrowers. Moreover, we show that when soft information is taken into account in transactional (relationship) lending it increases (decreases) the probability of firms being credit rationed. These results support the view that LTs can be complementary, but reject the hypothesis that substitutability among LTs is somehow possible for outsiders by means of hardening of soft information.

Keywords: Lending technologies, bank-firm relationship, soft information, hard information, small business finance

JEL Classification: G21, G30, O16

Suggested Citation

Bartoli, Francesca and Ferri, Giovanni and Murro, Pierluigi and Rotondi, Zeno, SME Financing and the Choice of Lending Technology in Italy: Complementarity or Substitutability? (July 30, 2012). Available at SSRN: https://ssrn.com/abstract=2119898 or http://dx.doi.org/10.2139/ssrn.2119898

Francesca Bartoli

Assolombarda ( email )

via Pantano 9
Milano, Milano 20122
Italy

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

Zeno Rotondi

UNICREDIT ( email )

VIA SPECCHI 16
ROME, 00186
Italy

HOME PAGE: http://docenti.luiss.it/rotondi

LUISS Guido Carli University ( email )

Via O. Tommasini 1
Rome, Roma 00100
Italy

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