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

See all articles by Steven Ongena

Steven Ongena

University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)

Sara Pinoli

Bank of Italy

Paola Rossi

Bank of Italy

Alessandro Scopelliti

KU Leuven, Department Accounting, Finance and Insurance; University of Zurich - Department Finance

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

Suggested Citation

Ongena, Steven R. G. and Pinoli, Sara and Rossi, Paola and Scopelliti, Alessandro, Bank Credit and Market-based Finance for Corporations: The Effects of Minibond Issuances for Unlisted Firms (November 8, 2020). Swiss Finance Institute Research Paper No. 20-93, Available at SSRN: https://ssrn.com/abstract=3727197 or http://dx.doi.org/10.2139/ssrn.3727197

Steven R. G. Ongena (Contact Author)

University of Zurich - Department Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

NTNU Business School ( email )

Norway

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Sara Pinoli

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Paola Rossi

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Alessandro Scopelliti

KU Leuven, Department Accounting, Finance and Insurance ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

University of Zurich - Department Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

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