Changes in the economic environment where banks and small businesses operate have raised questions about the availability of credit to small businesses. Small businesses have fewer alternatives to external finance than do large companies. A brief overview of small firm financing is offered,...

Unlike previous research that focused on how technology influences asset ownership, the focus here is on how the environment of a firm impacts its business procedures and business activities.Also explored are several models that hypothesize about the lending habits of small and large banks....

Theories based on incomplete contracting suggest that small organizations may do better than large organizations in activities that require the processing of soft information. We explore this idea in the context of bank lending to small firms, an activity that is typically thought of as relying...