The Ability of Banks to Lend to Informationally Opaque Small BusinessesWorld Bank Publications, 2013 We test hypotheses about the effects of bank size, foreign ownership, and distress on lending to informationally opaque small firms using a rich new data set on Argentinean banks, firms, and loans. We also test hypotheses about borrowing from a single bank versus multiple banks. Our results suggest that large and foreign-owned institutions may have difficulty extending relationship loans to opaque small firms. Bank distress appears to have no greater effect on small borrowers than on large borrowers, although even small firms may react to bank distress by borrowing from multiple banks, raising borrowing costs and destroying some relationship benefits. |
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Argentina Banking and Finance banks tend Berger and Udell BNKASSET10 borrow from multiple Coef t-Stat Coef credit crunch DELINQ Dependent Variable Detragiache distressed banks Distressed-Bank Barriers Hypothesis domestically-owned banks Dunkelberg 1999 Economic Significance effects of bank effects of LNSIZE exacerbate opacity problems excluding state-owned banks Federal Reserve Board financial distress firm borrows firm's primary activity firm's primary bank foreign bank foreign-owned banks Foreign-Owned-Bank Barriers Hypothesis Garella Guiso informationally opaque firms informationally opaque small interaction term LNSIZE*DELINQ Journal of Banking Journal of Financial large banks large firms Large-Bank Barriers Hypothesis lending to informationally Logit M&As main hypotheses measured effects multiple banks multiple lenders Multiple-Bank Bank-Distress Hypothesis Opacity/Relationship opaque small businesses pesos prediction primary bank distress relationship credit relationship lending services Scott and Dunkelberg secondary hypotheses single banking relationships Single-Bank Firm-Opacity Hypothesis small banks small business lending smaller firms smallest 25 study found supply of relationship t-Stat Coef t-Stat World Bank