Access to credit for SMEs: theories and evidence

In this thesis we focus on firms’ access to credit under different sources of asymmetric information.In Chapter 1 we analyze how the institution of debt discharge of bankruptcy law affects loan contracts. In particular we evaluates the effects of debt discharge on access to credit and cost of credit by taking into account its impact on the role of collateral as a signaling device. In the theoretical model we take explicitly into account the fact that borrowers can undo the effects of exemption by posting collateral to secure debt. Using the results of the theoretical analysis we test for the signaling effect of collateral in a sample of US small businesses.In Chapter 2 we study the emergence of the phenomenon of firms’ bor- rowing discouragement. This becomes a relevant issue in the credit market especially when credit worthy firms do not apply causing a po- tential misallocation of financial resources. Regarding this aspect of access to credit, our work aims to give a new theoretical view of bor- rowing discouragement stemming from the interaction between asym- metric information, uncertainty on collateral requirements and cost of applications.In Chapter 3 we study the importance of using trade credit to reduce the information asymmetries between firms and banks. Under this per- spective trade credit is a complementary financing resource. We test the complementarity hypothesis using an empirical methodology that takes into account the relevance of private information in the firm-bank relationship.