Does banking relationship configuration affect the risk-taking behavior of French SMEs?

Authors

  • Ludovic Vigneron Valenciennes University, France
  • Ramzi Benkraiem Audencia Nantes School of Management, France

DOI:

https://doi.org/10.17811/ebl.4.4.2015.166-174

Abstract

Using a new and unique dataset dealing with French small and medium-sized enterprise (SME) financing that provides detailed information about 1 116 firm-bank relationships, we test how the number of banks with which a firm works and the organizational structure of its main bank influence its risk-taking behavior. We find evidence that SMEs engaged with a decentralized main bank (a local or mutual one) invest in less risky projects, especially when they work with fewer than three banks (one or two). We also find evidence that single-bank SMEs engaged with a centralized bank (a large or foreign one) take significantly more risks than the others.

Author Biography

Ramzi Benkraiem, Audencia Nantes School of Management, France

Dr Ramzi Benkraiem is an Associate Professor of Financial Accounting & Finance at Audencia School of Management in France. He Holds a PhD from Toulouse Graduate School of Management and an HDR (State Habilitation for supervising Doctoral Research) from Western Brittany University. His research interests lie mainly within the Economics, Accounting and Finance areas. He published several papers in both French and international peer-reviewed journals.

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Published

2015-11-25

How to Cite

Vigneron, L., & Benkraiem, R. (2015). Does banking relationship configuration affect the risk-taking behavior of French SMEs?. Economics and Business Letters, 4(4), 166–174. https://doi.org/10.17811/ebl.4.4.2015.166-174