Access to Finance in a Cross-Country Context Defended on Thursday, 4 June 2015
Access to finance is one of the most serious obstacles faced by corporations. Financing constraints lead to large opportunity costs and negative consequences for economic growth, productivity, and welfare. In three studies, this dissertation examines mechanisms that can help to reduce financing constraints of companies. First study investigates the costs and benefits of relationship lending. Meta-analytic methodology reveals that relationship lending is generally beneficial for companies, but lenders and companies face trade-offs in lending relationships and lending outcomes. The results document positive effect of bank competition on borrower benefits. Second study develops a more complete conceptual framework of credit constraints. The new framework describes the occurrence of credit constraints in sequential, conditional stages. The results show that credit constraints vary with the bank lending environment beyond firm risk. Bank lending standards are strongly related to credit constraints, but the direction and the magnitude of the effect depend on the conditional stage. Third study examines the role of credit information sharing systems. The analysis documents dichotomous effects of information scope (depth of information) and scale (information coverage). While the information scope is associated with lower financing constraints, the information scale is associated with higher financing constraints, suggesting that accurate and deep information, rather than the coverage alone, contribute to lower financing constraints. The empirical results from the three studies demonstrate that promising new venues exist for increasing firms’ access to finance.
banks; bank loans; asymmetric information; competition; credit constraints, financing constraints; bank lending standards, small and medium-sized enterprises, loan terms; credit information