Relationship lending: empirical evidence from small businesses in the Veneto area

Abstract

A large body of literature claims that small firms face difficulties in accessing credit, due to their intense opacity. Relationship lending has been shown a crucial mean for them in order to mitigate the information asymmetries, enhancing small businesses’ financing availability and credit terms affordability. Relationship lending could be exposed to failure due to the challenging credit market evolution and to the dark side inherent in relationship lending that might induce small businesses to opt for new more convenient ways to access credit financing, like Mutual Guarantee Institutions (MGIs). This thesis reviews the most relevant literature about relationship lending effects on credit markets and contributes to the existing research from a firm perspective. The empirical analysis focuses on a subset of firms affiliated to a relevant MGI in the Veneto area, combining quantitative data of the MGI’s database and additional qualitative data collected through a survey submitted to its affiliates.