Family firms' access to bank lending. Evidence from Italy

In this study I empirically investigate whether family businesses are more likely to face financing constraints in the access to bank lending. By employing detailed qualitative and quantitative information about companies' ownership structure, rationing condition and bank-firm relationship characteristics, I find that family ownership adversely and significantly affect the probability of experiencing credit restrictions in the bank lending market. When accounting for ownership concentration, however, estimation results show that this finding remains statistically significant only for highly concentrated family firms. By looking at family business groups, moreover, I find that internal capital markets contribute to alleviate the existence of financing constraints. Overall, these results confirm the idea that the agency conflicts associated with highly concentrated family companies simultaneously increase risk shifting problems and wealth-expropriation phenomena with adverse consequences on the access to credit.