Credit rationing in small firm-bank relationships

Karolin Kirschenmann*

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

25 Citations (Scopus)

Abstract

I study credit rationing in small firm-bank relationships by using a unique data set of matched loan applications and contracts. I establish the degree of credit rationing by relating a firm's requested loan amount to the bank's granted amount. In line with theoretical predictions, credit rationing is higher for opaque than transparent firms at the beginning of their bank relationships and decreases over time for both. After testing for several alternative explanations, the results suggest that information and incentive problems explain the observed credit rationing and its dynamics. (C) 2015 Elsevier Inc. All rights reserved.

Original languageEnglish
Pages (from-to)68-99
Number of pages32
JournalJOURNAL OF FINANCIAL INTERMEDIATION
Volume26
DOIs
Publication statusPublished - Apr 2016
MoE publication typeA1 Journal article-refereed

Keywords

  • Credit rationing
  • Loan applications
  • Small firm lending
  • Asymmetric information
  • IMPERFECT INFORMATION
  • LENDING RELATIONSHIPS
  • FINANCIAL INTERMEDIATION
  • MARKETS
  • AVAILABILITY
  • BUSINESSES
  • POLICY

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