This paper examines the firms’ credit availability during the 2007–2009 financial crisis using a dataset of 5331 bank–firm relationships provided by borrowers’ credit folders of three Italian banks. It aims to test whether a strong lender–borrower relationship can produce less credit rationing for borrowing firms even during a credit crunch period. The results show that exclusivity of the relationship can mitigate the firm credit rationing. We also verify the influence of lending organizational structure during crisis. A new measure of distance in lending technologies has been introduced: the hierarchical distance calculated as the distance between the branch that originates the loan and the location of the hierarchical level responsible for financing decision. Our findings document a negative impact of distance on credit availability, consistent with the idea that proximity facilitates the transmission of soft information.

Using a sample of 1593 US firms that go public between 1990 and 2007, we find that VC-backed IPOs experience less financial distress risk post-offering than do comparable non-VC-backed IPOs. After controlling for endogeneity, we find this is related to the screening done by VC-investors, who select firms with lower risk of financial distress and by VCs reducing risks when they finance portfolio firms. We find companies backed by more reputable VCs exhibit higher levels of financial distress risk even when they show superior operating performance, due to their highly levered capital structure and investment in relatively illiquid assets.

We investigate the relationship between the going-public decision and firm risk. We employ a comprehensive sample of firms that went public on European stock exchanges from 2000 to 2015 and examine how the risks of these newly listed firms are different from those of private firms and long-listing firms. We find that compared with private firms, newly listed firms have significantly increased risks of financial distress. This difference is largely attributable to the increase in leverage and the decline in liquidity, profitability and retained earnings. The results are consistent after controlling for selection bias, the effect of stock issuance, and the impact of the financial crisis and are robust to different risk indicators and estimation models (namely, the treatment effect model and DID). Finally, we find that the risks of newly listed firms are much higher than those of long-listing firms, and the risk effect of newly listed firms gradually weakens after listing. We argue that the increase in risk of IPO firms is temporary and is likely to be caused by the transition to public listing.