Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/176002 
Year of Publication: 
2006
Series/Report no.: 
Texto para discussão No. 519
Publisher: 
Pontifícia Universidade Católica do Rio de Janeiro (PUC-Rio), Departamento de Economia, Rio de Janeiro
Abstract: 
Relationships are a valuable technology to produce loans. (Berger and Udell [1995], Petersen and Rajan [1994], Aoki and Dinç [2002]). While there are convincing theories in which relationships solve hidden action or hidden information problems, there is very little empirical corroboration of either theory. In this paper, we assess the empirically validity of these theories in the small firm credit market. While results suggest that relationships are more valuable for firms with worse incentive misaligment problems, more informationally opaque firms do not seem to extract more value from relationships. Contrary to what most empirical research on the value of relationships has assumed (but not tested), this indicates that relationships are, at very least, as important for aligning incentives as they are for solving hidden information problems.
Document Type: 
Working Paper

Files in This Item:
File
Size
226.97 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.