"Lines of Credit and Relationship Lending in Small Firm Finance"

This paper examines the role of_.relationship..lending.using a data set on small firm finance. We specifically examine price and nonprice terms of commercial bank lines of credit (L/C) extended to small firms. Our focus on bank L/Cs allows us to examine a type of loan contract where the bank-borrower relationship is likely to be an important mechanism for solving asymmetric information problems associated with financing small enterprises. We find that borrowers with longer banking relationships tend to pay lower interest rates and are less likely to pledge collateral. These results are consistent with theoretical arguments that relationship lending generates valuable information about borrower quality.

A more complete conceptual framework for financing of small and medium enterprises

The authors propose a more complete conceptual framework for analysis of credit availability for small and medium enterprises (SMEs). In this framework, lending technologies are the key conduit through which government policies and national financial structures affect credit availability. They emphasize a causal chain from policy to financial structures which affect the feasibility and profitability of different lending technologies. These technologies, in turn, have important effects on SME credit availability. Financial structures include the presence of different financial institution types and the conditions under which they operate. Lending technologies include several transactions technologies, plus relationship lending. The authors argue that the framework implicit in most of the literature is oversimplified, neglects key elements of the chain, and often yields misleading conclusions. A common oversimplification is the treatment of transactions technologies as a homogeneous group, unsuitable for serving informationally opaque SMEs, and a frequent misleading conclusion is that large institutions are disadvantaged in lending to opaque SMEs.Banks&Banking Reform,Financial Intermediation,Investment and Investment Climate,Economic Theory&Research,Financial Crisis Management&Restructuring

The ability of banks to lend to informationally opaque small businesses

Consolidation of the banking industry is shifting assets into larger institutions that often operate in many nations. Large international financial institutions are geared toward serving large wholesale customers. How does this affect the banking system's ability to lend to informationally opaque small businesses? The authors test hypotheses about the effects of bank size, foreign ownership, and distress on lending to informationally opaque small firms, using a rich new data set on Argentinean banks, firms, and loans. They also test hypotheses about borrowing from a single bank versus borrowing from several banks. Their results suggest that large and foreign-owned institutions may have difficulty extending relationship loans to opaque small firms, especially if small businesses are delinquent in repaying their loans. Bank distress resulting from lax prudential supervision and regulation appears to have no greater effect on small borrowers than on large borrowers, although even small firms may react to bank distress by borrowing from multiple banks, despite raising borrowing costs and destroying some of the benefits of exclusive lending relationships.Payment Systems&Infrastructure,Financial Intermediation,Financial Crisis Management&Restructuring,Banks&Banking Reform,Decentralization,Banks&Banking Reform,Financial Intermediation,Financial Crisis Management&Restructuring,Economic Adjustment and Lending,Economic Theory&Research

The effect of market size structure on competition: the case of small business lending

Banking industry consolidation has raised concern about the supply of small business credit since large banks generally invest lower proportions of their assets in small business loans. However, we find that the likelihood that a small business borrows from a bank of a given size is roughly proportional to the local market presence of banks of that size, although there are exceptions. Moreover, small business loan interest rates depend more on the size structure of the market than on the size of the bank providing the credit, with markets dominated by large banks generally charging lower prices.Small business ; Bank size ; Bank loans ; Banking market

Alcohol mixed with energy drinks: Expectancies of use and alcohol-related negative consequences among a young adult sample

Objective: Energy drinks are a popular mixer with alcohol among college-aged young adults. Few studies to date have examined the relationships between expectancies of alcohol mixed with energy drink (AmED) use, AmED use and AmED-related negative consequences. Methods: Eighty college-aged young adults were surveyed regarding their alcohol and AmED use, related negative consequences and AmED expectancies. Associations were assessed using chi-square tests and Cramér\u27s V. A simple mediational model also was used to explore the potential relationships between AmED expectancies, AmED use and AmED-related negative consequences. Results: AmED use was associated with more types of related negative consequences than heavy alcohol use alone, and where AmED use and heavy alcohol use were mutually associated with a related negative consequence, the strength of association was stronger for AmED use. While several AmED-related negative consequences were associated with AmED expectancies, unwanted sexual contact and getting into a verbal argument were associated with the greatest number of expectancies. The mediational model identified a statistically significant indirect effect of AmED expectancies on AmED-related negative consequences mediated by AmED use. Conclusions: The study results contribute to the evidence that AmED use may confer additional risk for related negative consequences beyond heavy alcohol use and suggest that AmED expectancies may have a role in AmED use, which, in turn, is associated with AmED-related negative consequences. AmED expectancies may be targets for intervention to reduce AmED use considering the possible subsequent related negative consequences, especially those involving negative interpersonal experiences

Some Evidence on the Empirical Significance of Credit Rationing

This paper examines the credit rationing debate using detailed contract information on over one million commercial bank loans from 1977 to 1988. While commercial loan rates are Sticky, consistent with rationing, this stickiness varies with loan contract terms in ways that are not predicted by equilibrium credit rationing theory. In addition, the proportion of new loans issued under commitment does not increase significantly when credit markets are tight, despite the fact that borrowers without commitments can be rationed whereas commitment borrowers are contractually insulated from rationing. Overall, the data suggest that equilibrium rationing is not a significant macroeconomic phenomenon

Extracting Imperative Programs from Proofs: In-place Quicksort

The process of program extraction is primarily associated with functional programs with less focus on imperative program extraction. In this paper we consider a standard problem for imperative programming: In-place Quicksort. We formalize a proof that every array of natural numbers can be sorted and apply a realizability interpretation to extract a program from the proof. Using monads we are able to exhibit the inherent imperative nature of the extracted program. We see this as a first step towards an automated extraction of imperative programs. The case study is carried out in the interactive proof assistant Minlog

Diallel analysis and heritability estimates of fiber traits for ELS, Gossypium hirsutum L., progeny.

With a demand for high-quality cotton fiber in international markets, improvement of fiber quality in U.S. grown commercial cultivars is necessary. Smith, Hague, Thaxton, and Jones developed a group of experimental lines in 2008 that produced extra-long staple fiber (>35.6 mm). This study determined general combining ability (GCA), and specific combining ability (SCA) of four experimental ELS lines and four commercial cultivars utilizing biplot and conventional diallel analysis, determined performance of F2 progeny, calculated broad-sense (H2) heritability estimates for F2 progeny, and verified the ability of selected parental combinations to produce variable segregating populations with variability of fiber traits. Initial crosses were made in 2007, with additional crosses being made in the field and in a greenhouse in 2008. F1 progeny and parents were grown in a replicated trial near College Station, TX, in 2007 and 2008. F2 progeny lines and parents were grown in replicated trials at two locations in 2008. Due to a significant GxY interaction for all F1 fiber traits, data were reported by years. Experimental ELS lines showed positive GCA effects for fiber length, strength, and length uniformity, while the majority of commercial lines showed negative effects. These findings suggest experimental ELS lines contain alleles for fiber length and strength not present in this particular set of commercial cultivars. Experimental ELS lines exhibited negative GCA effects for lint percent, which suggests further selection is needed for these lines to be commercially competitive. Performances of F2 lines suggest differences in fiber traits are predominantly due to additive gene action. Furthermore, data suggests alleles for fiber length and strength is present in the experimental ELS lines not present in the commercial cultivars. F2 progeny exhibited moderate heritability for all fiber traits. Sufficient variability exists within selected F2 progeny to select for phenotypes exhibiting improved fiber quality over commercial cultivar potential with similar agronomic qualities of commercial cultivars. The ELS lines are a useful source of germplasm for plant breeders looking to improve fiber qualities in their programs