TY - JOUR
T1 - The Benefits of Lending Relationships
T2 - Evidence from Small Business Data
AU - PETERSEN, MITCHELL A.
AU - RAJAN, RAGHURAM G.
PY - 1994/3
Y1 - 1994/3
N2 - This paper empirically examines how ties between a firm and its creditors affect the availability and cost of funds to the firm. We 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. We find smaller effects on the price of credit. Attempts to widen the circle of relationships by borrowing from multiple lenders increases the price and reduces the availability of credit. In sum, relationships are valuable and appear to operate more through quantities rather than prices. 1994 The American Finance Association
AB - This paper empirically examines how ties between a firm and its creditors affect the availability and cost of funds to the firm. We 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. We find smaller effects on the price of credit. Attempts to widen the circle of relationships by borrowing from multiple lenders increases the price and reduces the availability of credit. In sum, relationships are valuable and appear to operate more through quantities rather than prices. 1994 The American Finance Association
UR - http://www.scopus.com/inward/record.url?scp=84993914974&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84993914974&partnerID=8YFLogxK
U2 - 10.1111/j.1540-6261.1994.tb04418.x
DO - 10.1111/j.1540-6261.1994.tb04418.x
M3 - Article
AN - SCOPUS:84993914974
SN - 0022-1082
VL - 49
SP - 3
EP - 37
JO - The Journal of Finance
JF - The Journal of Finance
IS - 1
ER -
