Is banking competition beneficial to SMEs? An empirical study based on Italian data |
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Authors: | Mariarosaria Agostino Francesco Trivieri |
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Institution: | 1.Università della Calabria,Calabria,Italy |
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Abstract: | Using a large panel of Italian firms, spanning the years from 1995 to 2003, this study investigates the relationship between
bank debt and non-financial SMEs’ performance, evaluating whether and to what extent this link is affected by the degree of
competition characterising the local credit market where firms operate. Controlling for inertia, unobserved heterogeneity
and the endogeneity of some performance determinants, we find that the (negative) impact of bank debt on firms’ performance
is weaker for firms running in more competitive banking markets. We interpret this result as evidence that a more intense
banking competition may lead to better credit conditions for small and medium-sized firms. |
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