TY - JOUR
T1 - Credit market structure and bank screening
T2 - an indirect test on Italian data
AU - Agostino, M.
AU - Gagliardi, F.
AU - Trivieri, F.
N1 - Original article can be found at: http://www.sciencedirect.com/ Copyright Elsevier
PY - 2010
Y1 - 2010
N2 - Based on a large panel of Italian SMEs, this paper focuses on the relationship between firms' default probability and the amount of bank debt they obtain, evaluating whether and to what extent this link is affected by the degree of competition characterizing the local credit market where firms operate. Using a dynamic panel estimator, we find that higher bank competition implies a stronger influence of firms' riskiness on bank financing to SMEs. We provide two plausible interpretations of this finding: one resorting to more accurate screening by more competitive banks; the other alleging lower market power of incumbent banks, which may restrict their willingness to finance riskier firms.
AB - Based on a large panel of Italian SMEs, this paper focuses on the relationship between firms' default probability and the amount of bank debt they obtain, evaluating whether and to what extent this link is affected by the degree of competition characterizing the local credit market where firms operate. Using a dynamic panel estimator, we find that higher bank competition implies a stronger influence of firms' riskiness on bank financing to SMEs. We provide two plausible interpretations of this finding: one resorting to more accurate screening by more competitive banks; the other alleging lower market power of incumbent banks, which may restrict their willingness to finance riskier firms.
KW - credit market structure
KW - small and medium sized firms
KW - bank debt
KW - firm riskiness
U2 - 10.1016/j.rfe.2010.06.003
DO - 10.1016/j.rfe.2010.06.003
M3 - Article
SN - 1058-3300
VL - 19
SP - 151
EP - 160
JO - Review of Financial Economics
JF - Review of Financial Economics
IS - 4
ER -