Who Captures Who: Long-Lasting Bank Relationships and Growth of Firms

54 Pages Posted: 2 Jun 2009 Last revised: 6 Mar 2012

See all articles by Alessandro Gambini

Alessandro Gambini

Università Politecnica delle Marche - Department of Economics and Money and Finance Research group (Mo.Fi.R.); Confindustria Research Centre; Centre for Macroeconomics & Finance Research (CeMaFiR)

Alberto Zazzaro

Polytechnic University of Marche - Faculty of Economics

Date Written: May 25, 2009

Abstract

The theoretical literature has identified potential benefits and costs of close bank-firm relationships for both parties, suggesting possible reasons for firms being captured by banks and vice versa. In this paper we empirically explore the effects of long-lasting credit relationships on employment and asset growth of a large sample of Italian manufacturing firms in the period 1998-2003. The main findings are that relationship lending hampers the efforts of small firms to increase their size (especially in terms of employees), while it mitigates the negative growth of troubled, medium-large enterprises, thus supporting the hypothesis that small firms are captured by banks which, in turn, are captured by large firms.

Keywords: relationship lending, capture effects, firms’ growth

JEL Classification: G21, G34

Suggested Citation

Gambini, Alessandro and Zazzaro, Alberto, Who Captures Who: Long-Lasting Bank Relationships and Growth of Firms (May 25, 2009). Available at SSRN: https://ssrn.com/abstract=1412630 or http://dx.doi.org/10.2139/ssrn.1412630

Alessandro Gambini (Contact Author)

Università Politecnica delle Marche - Department of Economics and Money and Finance Research group (Mo.Fi.R.) ( email )

Piazzale Martelli, 8
60121 Ancona
Italy
+39 0712207230 (Phone)

HOME PAGE: http://www.mofir.univpm.it

Confindustria Research Centre ( email )

Viale Atronomia 30
Rome, 00144
Italy

HOME PAGE: http://www.confindustria.it

Centre for Macroeconomics & Finance Research (CeMaFiR) ( email )

Piazza Mirabello, 2
Milano, 20100
Italy

Alberto Zazzaro

Polytechnic University of Marche - Faculty of Economics ( email )

Piazzale Martelli, 8
60121 Ancona
Italy

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