Bank Organization and Loan Contracting in Small Business Financing

Entrepreneurial Finance: Managerial and Policy Implications, Page Number(s): 177-204

University of Cincinnati Lindner College of Business Research Paper

Posted: 6 Nov 2017

See all articles by Andrea Bellucci

Andrea Bellucci

European Commission

Alexander Borisov

University of Cincinnati - Department of Finance - Real Estate

Alberto Zazzaro

Università Politecnica delle Marche - Faculty of Economics

Date Written: July 1, 2016

Abstract

Academic research recognizes that the organizational structure of banks could have implications for the financing of small businesses and entrepreneurial firms. In this chapter, we start by reviewing the underlying theoretical motivation and then summarize existing evidence. Overall, it is confirmed that the organization of lending institutions is important for the use and transmission of information, as well as credit availability for small businesses. Moreover, using a unique dataset of bank loans, we empirically document that loan contract characteristics such as interest rates and collateral requirements are sensitive to the hierarchical allocation of decision-making authority within the bank's organization.

Keywords: Bank organization structure, Authority allocation, Small business financing

Suggested Citation

Bellucci, Andrea and Borisov, Alexander and Zazzaro, Alberto, Bank Organization and Loan Contracting in Small Business Financing (July 1, 2016). Entrepreneurial Finance: Managerial and Policy Implications, Page Number(s): 177-204 ; University of Cincinnati Lindner College of Business Research Paper. Available at SSRN: https://ssrn.com/abstract=3064240

Andrea Bellucci (Contact Author)

European Commission ( email )

Belgium

Alexander Borisov

University of Cincinnati - Department of Finance - Real Estate ( email )

College of Business Administration
Cincinnati, OH 45221
United States

Alberto Zazzaro

Università Politecnica delle Marche - Faculty of Economics ( email )

Piazzale Martelli, 8
60121 Ancona
Italy

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