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Small and medium-sized enterprises, bank relationship strength, and the use of venture capital

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Small and medium-sized enterprises, bank relationship strength, and the use of venture capital. / Berger, Allen N.; Schaeck, Klaus.

In: Journal of Money, Credit and Banking, Vol. 43, No. 2-3, 01.03.2011, p. 461-490.

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Berger, Allen N. ; Schaeck, Klaus. / Small and medium-sized enterprises, bank relationship strength, and the use of venture capital. In: Journal of Money, Credit and Banking. 2011 ; Vol. 43, No. 2-3. pp. 461-490.

Bibtex

@article{8c2f5b2b81b246a485b7f543408555fd,
title = "Small and medium-sized enterprises, bank relationship strength, and the use of venture capital",
abstract = "We investigate the nexus between small and medium-sized enterprises{\textquoteright} (SMEs{\textquoteright}) use of venture capital and bank financing relationships using a unique data set with detailed information on SME finance in Italy, Germany, and the UK. The empirical regularities we uncover show that that entrepreneurial firms substitute venture capital for multiple banking relationships. This substitution effect is primarily driven by expertise substitution, and there is also some suggestive, yet inconclusive, indication in the data that SMEs turn to providers of venture capital to avoid rent-extracting behavior by the firm's main bank. Our results do not support the view that firms obtain venture capital in instances when bank financing is difficult to obtain. Instead, venture capital funds are used if bank funding is deemed not appropriate, and firms do seem to be aware of which type of financing is more appropriate for them.",
keywords = "venture capital, relationship banking, SME financing",
author = "Berger, {Allen N.} and Klaus Schaeck",
year = "2011",
month = mar
day = "1",
doi = "10.1111/jmcb.2011.43.issue-2-3",
language = "English",
volume = "43",
pages = "461--490",
journal = "Journal of Money, Credit and Banking",
issn = "0022-2879",
publisher = "Wiley-Blackwell",
number = "2-3",

}

RIS

TY - JOUR

T1 - Small and medium-sized enterprises, bank relationship strength, and the use of venture capital

AU - Berger, Allen N.

AU - Schaeck, Klaus

PY - 2011/3/1

Y1 - 2011/3/1

N2 - We investigate the nexus between small and medium-sized enterprises’ (SMEs’) use of venture capital and bank financing relationships using a unique data set with detailed information on SME finance in Italy, Germany, and the UK. The empirical regularities we uncover show that that entrepreneurial firms substitute venture capital for multiple banking relationships. This substitution effect is primarily driven by expertise substitution, and there is also some suggestive, yet inconclusive, indication in the data that SMEs turn to providers of venture capital to avoid rent-extracting behavior by the firm's main bank. Our results do not support the view that firms obtain venture capital in instances when bank financing is difficult to obtain. Instead, venture capital funds are used if bank funding is deemed not appropriate, and firms do seem to be aware of which type of financing is more appropriate for them.

AB - We investigate the nexus between small and medium-sized enterprises’ (SMEs’) use of venture capital and bank financing relationships using a unique data set with detailed information on SME finance in Italy, Germany, and the UK. The empirical regularities we uncover show that that entrepreneurial firms substitute venture capital for multiple banking relationships. This substitution effect is primarily driven by expertise substitution, and there is also some suggestive, yet inconclusive, indication in the data that SMEs turn to providers of venture capital to avoid rent-extracting behavior by the firm's main bank. Our results do not support the view that firms obtain venture capital in instances when bank financing is difficult to obtain. Instead, venture capital funds are used if bank funding is deemed not appropriate, and firms do seem to be aware of which type of financing is more appropriate for them.

KW - venture capital

KW - relationship banking

KW - SME financing

U2 - 10.1111/jmcb.2011.43.issue-2-3

DO - 10.1111/jmcb.2011.43.issue-2-3

M3 - Journal article

VL - 43

SP - 461

EP - 490

JO - Journal of Money, Credit and Banking

JF - Journal of Money, Credit and Banking

SN - 0022-2879

IS - 2-3

ER -