Firm–bank “odd couples” and trade credit: Evidence from Italian small- and medium-sized enterprises

Jérémie Bertrand (1) , Pierluigi Murro (2)

1 LEM - Lille économie management - UMR 9221
2 Department of Business and Management, LUISS University

One of the most crucial obstacles for small- and medium-sized enterprises is access to credit primarily because of their high opacity. The existing literature underlines that relationship banks specialize in analyzing opaque firms, thereby allowing them better access to credit; however, what can opaque firms do if they cannot find a relationship bank? By using an Italian database, with more than 900 firms, we reveal that when opaque firms deal with transactional banks (the “odd couples”), they use a greater portion of trade credit. This result is robust to alternative measures of trade credit and lending technologies. We further analyze the mechanisms driving the association between odd couples and trade credit use. Regression results suggest that the positive association is particularly significant for firms with more market power, not “captured” by their primary bank, and located in areas with high levels of social capital.

Mots clés: Banks; Lending technologies; Small business; Trade credit

Domaines: Gestion et management

Jérémie Bertrand, Pierluigi Murro. Firm–bank “odd couples” and trade credit: Evidence from Italian small- and medium-sized enterprises. Economic Modelling, 2022, 111, pp.105829. ⟨10.1016/j.econmod.2022.105829⟩. ⟨hal-03703975⟩