Relational capital in lending relationships. Evidence from European family firms

The aim of this paper is to investigate the role of family CEOs’ relational capital and non-family CEOs’ managerial skills in the context of bank relationships for a large sample of small- and medium-sized European firms. The results indicate that family firms appointing family managers are significantly more likely to maintain soft-information-based and longer-lasting lending relationships than family firms managed by professionals, and that these closer bank-firm ties reduce the likelihood of experiencing credit restrictions. Moreover, we find that having professional CEOs does not directly affect the probability of being credit rationed. Hence, family relational capital appears to have a univocal beneficial impact on bank-firm relationships.