Title: Firm size, bank relational strategy and credit: the mediating role of bank knowledge in small firm access to debt finance

Authors: Patrick Saparito, Kenneth Colwell

Addresses: Haub School of Business, Saint Joseph's University, 5600 City Avenue, Philadelphia, PA 19131, USA. ' School of Business Administration, University of Miami, Miami, FL 33146, USA

Abstract: Inadequate credit access is an acute problem for small businesses, particularly in the current economic climate. US banks have moved away from building long-term relationships with small firms. However, research is equivocal on whether such a strategic stance decreases small firms| credit access within the USA. Using the knowledge-based view of the firm, we examine the central role of a bank|s knowledge about clients in determining small firm access to credit. Using a survey of 1,677 small firm executives in the USA collected by the National Foundation of Independent Business, we test whether a bank|s relational strategy is actually associated with increased knowledge about small client firms. We then examine whether this knowledge translates into increased credit access. Additionally, we test whether client firm size is associated with increased bank knowledge about the firm and whether this knowledge translates into increased small firm credit access.

Keywords: bank-firm relationships; credit access; relational strategy; knowledge-based view; KBV; firm size; bank knowledge; small firms; debt finance; banking industry; US banks; United States.

DOI: 10.1504/IJEV.2010.033916

International Journal of Entrepreneurial Venturing, 2010 Vol.2 No.1, pp.40 - 55

Published online: 03 Jul 2010 *

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