This paper tests the impact of an imperfect firm–bank type match on firms’ financial constraints using a dataset of about 4500 Italian manufacturing firms. Considering an optimal match of opaque (transparent) borrowing firms with relational (transactional) lending main banks, the possibility arises of firm–bank ‘‘odd couples’’ where opaque firms end up matched with transactional main banks. We show that the probability of credit rationing increases when the mismatch between firms and banks widens. Our conjecture is that ‘‘odd couples’’ emerge either because of organizational changes in the credit market or since firms observe only imperfectly banks’ lending technology.

We test in a European context the impact of countries' lending infrastructure on SMEs (small and medium sized enterprises) capital structure. Devised from Berger and Udell (2006), this infrastructure is comprised of the information, legal, judicial, bankruptcy, social, tax and regulatory environments. We find that SME debt is higher in countries with more efficient bankruptcy environments in terms of debt recovery and in countries with less stringent regulatory environments by way of lower capital regulatory requirements for banks. Components of the lending infrastructure are found to differ with debt maturity. Long-term debt is synonymous with efficient bankruptcy environments, whilst the information and legal environments matter more for short-term debt. The regulatory environment is important for both long-term and short-term debt. Our results also lend support for the Pecking-Order, Trade-Off and Agency theories of capital structure.

This paper investigates the impact of family ownership on credit rationing using a rich sample of Italian firms. Estimation results indicate that family owned firms are more likely to experience credit restrictions. The adverse impact of family ownership on credit rationing is particularly relevant for small-sized firms, whereas it is mitigated in firms with closer lending relationships. Finally, we find some evidence that family firms with high ownership concentration are more likely to be rationed by banks.

Using a rich sample of small and medium-sized European manufacturers, we investigate the nexus between banks’ relationship lending technologies and firms’ export activities during the 2009 great trade collapse. We find that the contraction of firms’ export was milder when banks had access to up-to-date “soft” information on firms’ export prospects. However, we find no evidence of an association between the resilience of firms’ export and banks’ experience on firms’ past activities. The nexus between export resilience and banks’ access to soft information is especially tight for young and small exporters and for firms at an early stage of internationalization.

We examine the role played by Mutual Guarantee Institutions (MGIs) in the lending policies undertaken by banks at the peak of the Great Crisis of 2007–2009. We address this issue by using a large database on Italian firms built from the credit files of UniCredit banking Group and focusing on small business. We provide an empirical analysis of the determinants of the probability that a borrowing firm will suffer financial tension and obtain two main innovative findings. First, we find that small firms supported by MGIs less likely experienced financial tensions even at that time of utmost financial stress. Second, our empirical evidence shows that MGIs played a signaling role beyond the simple provision of collateral. This latter finding suggests that the information provided by MGIs turned out to be key for bank–firm relations as scoring and rating systems – being typically based on pro-cyclical indicators – had become less informative during the crisis.

Using firm-level survey information, we investigate whether relationship lending affects firms’ employment decisions in the face of negative sales shock. We find that firms with a durable relationship with their main bank display significantly less employment growth sensitivity to such shocks, especially where these are transitory. The result is stronger for younger and smaller firms that benefit from tighter bank-firm relationships, and for firms in sectors or economic environments where the costs of employment adjustment are greater. Our findings indicate that relationship lending provides liquidity insurance to firms to meet their demand for labor hoarding.

This paper investigates SME financing in Italy. The literature distinguishes between two main different lending technologies (LTs) for SMEs: transactional and relationship LTs. We find that banks lend to SMEs by using both LTs together, independently of the size and proximity of borrowers. Moreover, we show that the use of soft information decreases the probability of firms being credit rationed. Finally, we find that more soft information is produced when the bank uses relationship LT as primary technology individually or coupled with transactional LT. Our results support the view that LTs can be complementary, but reject the hypothesis that substitutability among LTs is somehow possible for outsiders by means of hardening of soft information.