Relationship lending, distance and efficiency
Banking and corporate finance
SMEs, R&D and corporate finance
Corporate banking and SMEs
Cooperative Credit Institutions
Credit risk and internal rating
With reference to the first topic we observe that during
the last decades banks have progressively moved towards centralized
and hierarchical organizational structures. Therefore, the
investigation of the determinants of bank efficiency and
relationships with the functional distance between the bank
head-quarter and operational units have become increasingly
important. This paper extends the literature on bank efficiency
examining the impact of different bank business models on the
efficiency of the Italian banks, distinguished by size and type
over the period 2006-2009. Using a stochastic frontier approach,
the intertemporal relationships between bank efficiency and some
key variables, as distance and income diversification (used as
proxies of different organizational banking models) are
investigated. Results suggest that organizational structure
significantly affects cost efficiency, being different between bank
groups.
The second topic of the research is the analysis of the
determinants of Italian SMEs' choices of sources of finance, with
specific reference to the role of informed (internal) capital
compared to other forms of finance. In this work, we aim to
identify the determinants of the mix of sources of finance using
data from the Survey of Italian Firms conducted by Capitalia,
bearing in mind the structural characteristics of the firms and the
banking market, and the problems of the information asymmetry
between the bank and the firm. Although the financial hierarchy
theory suggests that firms prefer self-financing, because it is
less expensive in economic terms, relationships with local banks
may offer advantages which encourage firms to enter into debt
contracts even in the absence of binding internal constraints. The
empirical study focused in particular on the role of self-financing
as an alternative to external sources. In order to measure the
decision to use self-financing and the subsequent composition of
the financing mix, we used different techniques, first independent
models and then a self-selection model. The first results, in line
with the pecking order theory, confirm an approach comprising an
initial check on the availability of internal resources, followed
if by the use of external capital, including bank debt.
Related to the third topic we identify the different role
of financial funds in traditional and R&D investments in
Italian firms. Given its intrinsic characteristics, R&D is
usually characterized by high information opacity and thus implies,
coherently with the asymmetric information theory, greater
difficulties in finding external financial funding. The higher risk
related to R&D projects could entail some form of financial
constraints. However, signaling mechanisms such as self-financing
could correct such a market imperfection. The aim of this research
is to investigate the determinants of R&D investment internal
financial funding (self-financing). Traditional and R&D
investments are considered to indicate a possible interaction
between different self-financing patterns. Using different
econometric models (Logit, OLS and SUR), our results show how
information and agency costs, reflected in firm characteristics,
affect financing decisions in both traditional and R&D
investments. Our findings are consistent with the hypothesis that,
in information opaque firms, internal equity plays an important
role in R&D financing decisions. To the contrary, traditional
investments are less related to self-financing. Public subsidies
play a crucial role as a stimulus of R&D and investment
self-financing. The overall evidence indicates that banking
variables are also more relevant in traditional investments.
