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The Benefits of Lending Relationships: Evidence from Small Business Data
This paper empirically examines how ties between a firm and its creditors affect the availability and cost of funds to the firm. We analyze data collected in a survey of small firms by the Small Business Administration. The primary benefit of building close ties with an institutional creditor is tha...
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| Published in: | The Journal of finance (New York) 1994-03, Vol.49 (1), p.3-37 |
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| Main Authors: | , |
| Format: | Article |
| Language: | English |
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| cited_by | cdi_FETCH-LOGICAL-c5868-9caeb45db74e13d28cbd2204cf9eefbce212b338d285b8d81a6dee2c7d890b463 |
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| cites | cdi_FETCH-LOGICAL-c5868-9caeb45db74e13d28cbd2204cf9eefbce212b338d285b8d81a6dee2c7d890b463 |
| container_end_page | 37 |
| container_issue | 1 |
| container_start_page | 3 |
| container_title | The Journal of finance (New York) |
| container_volume | 49 |
| creator | PETERSEN, MITCHELL A. RAJAN, RAGHURAM G. |
| description | This paper empirically examines how ties between a firm and its creditors affect the availability and cost of funds to the firm. We analyze data collected in a survey of small firms by the Small Business Administration. The primary benefit of building close ties with an institutional creditor is that the availability of financing increases. We find smaller effects on the price of credit. Attempts to widen the circle of relationships by borrowing from multiple lenders increases the price and reduces the availability of credit. In sum, relationships are valuable and appear to operate more through quantities rather than prices. |
| doi_str_mv | 10.1111/j.1540-6261.1994.tb04418.x |
| format | article |
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| identifier | ISSN: 0022-1082 |
| ispartof | The Journal of finance (New York), 1994-03, Vol.49 (1), p.3-37 |
| issn | 0022-1082 1540-6261 |
| language | eng |
| recordid | cdi_proquest_miscellaneous_38639805 |
| source | International Bibliography of the Social Sciences (IBSS); JSTOR Archival Journals and Primary Sources Collection |
| subjects | Bank loans Business financing Business structures Commercial credit Credit Economic models Financial investments Interest rates Investment credit Lenders Loan rates Loans Pricing policies Regression analysis Relationship banking Small and medium sized enterprises Small business Studies Trade credit |
| title | The Benefits of Lending Relationships: Evidence from Small Business Data |
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