The Benefits of Lending Relationships: Evidence from Small Business Data

  title={The Benefits of Lending Relationships: Evidence from Small Business Data},
  author={M. Petersen and Raghuram G. Rajan},
  journal={Journal of Finance},
  • M. Petersen, Raghuram G. Rajan
  • Published 1994
  • Economics
  • Journal of Finance
  • This paper empirically examines how ties between a firm and its creditors affect the availability and cost of funds to the firm. The authors analyze data collected in a survey of small firms by the Small Business Administration. The primary benefit of building close ties with an institutional creditor is that the availability of financing increases. The authors find smaller effects on the price of credit. Attempts to widen the circle of relationships by borrowing from multiple leaders increases… CONTINUE READING
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