The extant literature generally suggests that the performance of client firms deteriorates if their distressed main bank reduces the supply of credit. However, this insight is only consistent with the notion that main banks have an information advantage over other banks to the extent that a...

The banking literature concludes that the performance of client firms deteriorates if their distressed main bank reduces the supply of credit. However, these results rely on the assumption that main banks have an information advantage over other banks, such that if a client firm changes its main...

We investigate the financial resources used by small businesses in Japan during the period of recovery from a severe recession. Unlike large listed firms, small businesses cannot easily issue commercial debt or equity. Therefore, small businesses largely depend on trade credit and bank loans....

According to previous studies, a bank can set a higher interest rate for small firms by establishing a lending relationship since information asymmetry limits competition between banks. Therefore, the bank can acquire monopoly rent from small firms. However, if small firms can use trade credit...

Having a close relationship with a customer that accounts for a relatively high proportion of sales may be costly for small suppliers and weaken their bargaining power. Suppliers with a weak bargaining position may then find it difficult to reduce their provision of trade credit during a...

Previous studies argue that banks offer loans to informationally opaque businesses using relationship lending technology. Using survey data of small businesses in Japan, we show that informationally opaque and financially weak firms that do not have lending relationships use high interest rate...

Highly leveraged small businesses cannot obtain enough credit because of the debt overhang problem. Therefore, highly leveraged firms may lose potential profits from profitable investment opportunities in which they are unable to invest. On the other hand, highly leveraged small businesses can...

Using small business data, we investigate the relationship between bank loan availability and trade credit in Japan during the recent global financial crisis. Previous studies argue that the relationship between trade payables and bank loan availability is negative because trade credit is an...