Template-Type: ReDIF-Paper 1.0
Author-Name: Marco Cucculelli 
Author-X-Name-First: Marco
Author-X-Name-Last: Cucculelli
Author-Email: m.cucculelli@univpm.it
Author-Workplace-Name: Università Politecnica delle Marche
Author-Name: Valentina Peruzzi 
Author-X-Name-First: Valentina
Author-X-Name-Last: Peruzzi
Author-Email: v.peruzzi@univpm.it
Author-Workplace-Name: Università Politecnica delle Marche
Author-Name: Alberto Zazzaro 
Author-X-Name-First: Alberto
Author-X-Name-Last: Zazzaro
Author-Email: alberto.zazzaro@unina.it
Author-Workplace-Name: Università di Napoli Federico II
Title: Relational capital in lending relationships: Evidence from European family firms

Abstract: In this paper we empirically investigate the effects of active family involvement in the company’s management on bank-firm lending relationships and access to credit. Based on the trade-off between relational and management human capital, we explore whether the relational capital embodied in the family leadership of the company influences the lending relationships with the main bank in terms of information sensitivity and duration. Then, we test whether family firms with family CEOs are more likely to experience a credit restriction from banks than family firms appointing professional CEOs external to the family. Results indicate that family businesses appointing family managers are significantly more likely to maintain soft-information-based and longer-lasting lending relationships. However, having family executives does not have a negative impact on firm’s access to credit, while the creation of soft-information-based and long-lasting lending relationships significantly reduces the likelihood of experiencing credit restrictions. In view of these findings, family relational capital seems to have a univocal beneficial impact on bank-firm relationship in our sample.

Length: 38 pages
Creation-Date: 2016-08
Publication-Status: 
File-URL: https://repec.lumsa.it/wp/wpC12.pdf
File-Format: Application/pdf
Number: wpC12
Classification-JEL: D22, G21, G22
Keywords: Family firm, family CEO, soft-information, relational capital, relationship lending, credit rationing.
Handle: RePEc:lsa:wpaper:wpC12