Relationship lending and the role of mutual guarantee institutions for SME access to finance around the COVID-19 pandemic in the Veneto region

Abstract

Due to some characteristics such as information opaqueness and under-collateralization, financial institutions consider lending to small and medium-sized enterprises (SMEs) riskier than lending to large companies. As a consequence, SMEs are more likely to face credit availability issues. This work aims to discuss how small businesses may improve their access to bank financing. On the one hand, it revises some literature about lending technologies available for banks when lending to SMEs (focusing on relationship lending) and about the role of mutual guarantee institutions with respect to SME access to finance. On the other hand, it investigates the coexistence of relationship lending and mutual guarantee institutions by examining the answers of a group of enterprises which are members of “Cofidi Veneziano” to questionnaires concerning their access to finance. The purpose of this study is to be relevant especially with respect to the crisis generated by the COVID-19 pandemic, since for some enterprises answers have been collected both before and after its spread.