Does Function Follow Organizational Form? Evidence from the Lending Practices of Large and Small Banks

@article{Berger2002DoesFF,
  title={Does Function Follow Organizational Form? Evidence from the Lending Practices of Large and Small Banks},
  author={A. Berger and N. Miller and M. Petersen and R. Rajan and J. Stein},
  journal={Banking & Financial Institutions},
  year={2002}
}
  • A. Berger, N. Miller, +2 authors J. Stein
  • Published 2002
  • Economics
  • Banking & Financial Institutions
  • Theories based on incomplete contracting suggest that small organizations may do better than large organizations in activities that require the processing of soft information. We explore this idea in the context of bank lending to small firms, an activity that is typically thought of as relying heavily on soft information. We find that large banks are less willing than small banks to lend to informationally 'difficult' credits, such as firms that do not keep formal financial records. Moreover… CONTINUE READING
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