tailieunhanh - Does institutional quality matter for lending relationships?

Why the number of banking relationships per firm varies so much across space? Is it due to microeconomic features of firms localized in different places or is there something systematic, connected to geographical macroeconomic factors? Does local institutional endowment matter in the firm’s choice? We address these issues with reference to the Italian case, one particularly interesting because of the substantial institutional gap between Center-North and South, and the high average number of banking relationships. Consistent with previous studies, we find that provincial institutions are a basic determinant of the observed differentials in the number of banking relationships per firm. | Journal of Applied Finance Banking vol. 8 no. 2 2018 69-100 ISSN 1792-6580 print version 1792-6599 online Scienpress Ltd 2018 Does institutional quality matter for lending relationships Annamaria Nifo1 Sabrina Ruberto2 and Gaetano Vecchione3 Abstract Why the number of banking relationships per firm varies so much across space Is it due to microeconomic features of firms localized in different places or is there something systematic connected to geographical macroeconomic factors Does local institutional endowment matter in the firm s choice We address these issues with reference to the Italian case one particularly interesting because of the substantial institutional gap between Center-North and South and the high average number of banking relationships. Consistent with previous studies we find that provincial institutions are a basic determinant of the observed differentials in the number of banking relationships per firm. JEL classification numbers G20 G21 L60 O43 R11. Keywords Firm-Bank relationships Institutional quality Italian manufacturing SMEs. 1 Introduction During the last two decades the literature has paid great attention to the widespread use of multiple banking relationships. In almost all countries even relatively small firms borrow from several banks at the same time even if the distribution of the number of banking relationships per firm substantially varies 1 Department of Law and Economics - University of Sannio Italy 2 Department of Economics Statistics and Finance Giovanni Anania University of Calabria Italy 3 Department of Political Science - University of Naples Federico II Italy Article Info Received November 7 2017. Revised December 7 2017 Published online March 1 2018 70 Annamaria Nifo et al. across countries. Ongena and Smith 2000 using a dataset of 1079 large firms from 20 European countries document that single-bank relationships are relatively rare and Italy - with an average number of 15 banking relationships per firm - is the country