Bank lending technologies and credit availability in Europe. What can we learn from the crisis?

Using a unique sample of European manufacturing firms, we empirically investigate how bank lending technologies nd soft information adoption affected firms’ credit availability during the 2007-2009 financial crisis. Estimation results indicate that transactional lending technologies increased firms’ credit rationing, whereas soft information mitigated asymmetric information problems and improved firms’ access to credit. By looking at the combined effect of bank lending technologies and soft information, we also provide evidence about the complementarity between transactional lending techniques and soft information adoption. When soft information was incorporated in transactional lending technologies firms’ credit rationing significantly reduced. This result is especially strong for small borrowing firms and for companies matching with large financial institutions.