Should I Stay or Should I Go? Firms’ Mobility Across Banks in the Aftermath of Financial Turmoil

38 Pages Posted: 9 Feb 2017

Date Written: October 27, 2016

Abstract

We study the mobility of Italian firms across different lending banks in the aftermath of Lehman Brothers’ collapse, when 40 per cent of the firms analysed changed their pool of lending banks. Using a unique dataset on a sample of about 3,000 Italian firms that encompasses financial and economic records, information on the existence of credit constraints and data on lending relationships with banks, we provide evidence that mobility within the credit market helped to ease credit constraints. Firms that started new banking relationships were able to maintain or even increase their outstanding loans. These firms were generally large and credit-rationed. At the same time, access to new credit lines was more difficult for small and more opaque firms, for which a long-term relationship with their main bank has been the most effective way of overcoming financial constraints. Geographical proximity is also important in affecting credit constraints: the closer the firms are to the lending banks, the lower is the probability of their closing an existing credit relationship and start a new one.

Keywords: financial crisis, mobility in the credit market, relationship lending

JEL Classification: G01, G21, G32

Suggested Citation

Arnaudo, Davide and Micucci, Giacinto and Rigon, Massimiliano and Rossi, Paola, Should I Stay or Should I Go? Firms’ Mobility Across Banks in the Aftermath of Financial Turmoil (October 27, 2016). Bank of Italy Temi di Discussione (Working Paper) No. 1086. Available at SSRN: https://ssrn.com/abstract=2914254 or http://dx.doi.org/10.2139/ssrn.2914254

Davide Arnaudo

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Giacinto Micucci (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Massimiliano Rigon

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Paola Rossi

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Register to save articles to
your library

Register

Paper statistics

Downloads
21
Abstract Views
289
PlumX Metrics