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dc.contributor.authorZhang, Song
dc.contributor.authorHan, Liang
dc.contributor.authorKallias, Konstantinos
dc.contributor.authorKallias, Antonios
dc.identifier.citationZhang , S , Han , L , Kallias , K & Kallias , A 2022 , ' Bank switching of US small businesses : new methods and evidence ' , Review of Quantitative Finance and Accounting , vol. First Online .
dc.identifier.otherPURE: 276921409
dc.identifier.otherPURE UUID: a1b5d6a6-fd68-4159-b4c9-280b7684cab0
dc.identifier.otherORCID: /0000-0002-3673-2460/work/105957219
dc.identifier.otherScopus: 85122232736
dc.identifier.otherWOS: 000737692600001
dc.description.abstractDespite being informationally opaque, small firms often switch from their primary financial institution to transactional lenders, with the relationship banking theory invoking the holdup problem as a culprit explanation. Using US evidence and an estimation strategy that overcomes traditional shortcomings in small business research, our study captures the determinants and, for the first time, the ex post effects of the switching decision. We find that switching is less likely when the primary financial institution is a nearby bank associated with quality services and connected to the firm via other business or social relationships. Small firms become more loyal as they grow in size and pursue nonmortgage credit. Outside the primary relationship, both loan approval and borrowing cost are adversely impacted, however loan maturities are longer. Moreover, the likelihood of pledging collateral remains unaffected, provided that the type of collateral is least sensitive to the borrower’s information environment. Jointly, our findings describe a trade-off inconsistent with the holdup problem, and an opportunity for banks to enhance customer loyalty by improving aspects of the relationship unrelated to the terms of credit.
dc.relation.ispartofReview of Quantitative Finance and Accountingen
dc.rightsCopyright © The Author(s) 2022. Open Access. This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit
dc.subjectSmall businessen
dc.subjectRelationship bankingen
dc.subjectIPTW propensity scoreen
dc.subjectEntropy balancingen
dc.subjectHG Financeen
dc.titleBank switching of US small businesses : new methods and evidenceen
dc.typeJournal articleen
dc.description.versionPublisher PDFen
dc.contributor.institutionUniversity of St Andrews. School of Managementen
dc.description.statusPeer revieweden

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