publication . Article . Other literature type . Preprint . 2002

Small Business Credit Availability and Relationship Lending : The Importance of Bank Organisational Structure

Gregory F. Udell; Allen N. Berger;
Open Access
  • Published: 01 Feb 2002 Journal: Finance and Economics Discussion Series, volume 2,001, pages 1-36 (issn: 1936-2854, Copyright policy)
  • Publisher: Board of Governors of the Federal Reserve System
Abstract
This paper models the inner workings of relationship lending, the implications for bank organizational structure, and the effects of shocks to the economic environment on the availability of relationship credit to small businesses. Relationship lending depends on the accumulation over time by the loan officer of "soft" information. Because the loan officer is the repository of this soft information, agency problems are created throughout the organization that are best resolved by structuring the bank as a small, closely-held organization with few managerial layers. The shocks analyzed include technological innovations, regulatory regime shifts, banking industry ...
Subjects
free text keywords: Small business ; Bank loans, Economics and Econometrics, Financial system, Monetary policy, Small business, business.industry, business, Loan officer, Soft information, Banking industry, Credit availability, Structuring, Organizational structure, Economics, Finance

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