REDUCTION IN INFORMATION ASYMMETRY AND CREDIT ACCESS FOR SMALL AND MEDIUM-SIZED ENTERPRISES

We examine the relation between the quality, quantity, completeness, and timeliness of the information loan managers obtain from small and medium-sized enterprises (SMEs) and the amount of short-term credit provided to them by looking at 828 loan-manager-SME relationships in Italy. The result suggests that a reduction in information asymmetry is associated with a greater amount of credit. Moreover, the reduction in information asymmetry has a relevant economic impact on the amount of short-term credit obtained: the amount of credit provided increases by 12% when asymmetry reduces by one notch. Our results are robust to alternative specifications and to endogeneity.