Chapter 3: Do Inter-firm Networks Make Access to Finance Easier? Issues and Empirical Evidence
* Domenico Scalera and Alberto Zazzaro INTRODUCTION 1. A common, implicit assumption in many textbook presentations of corporate finance and lending decisions is that firms are single-handed, without any sort of stable nexus with other firms.1 However, it is frequent to observe real-world firms forming networks with numerous multilateral links based on formal and informal, hierarchical and non-hierarchical ties.2 In the presence of such a contrast between theory and practice, the crucial question is whether or not the assumption of stand-aloneness curbs the full understanding of firms’ financial problems; in other words, whether by thinking of economic agents in isolation we miss something important from the standpoint of financial analysis and bank-firm relationships. All in all, the answer emerging from 15 years of intense theoretical and empirical research on these issues is broadly affirmative. The objective of this chapter is to provide a selective review of the literature on interfirm networks and access to finance, giving an account of both the main accomplished results and the issues still unresolved. In particular, our discussion will be organized around two main questions. In Section 3 we inquire whether finance is a motivation driving the formation of inter-firm * A preliminary version of this chapter was presented at the workshop ‘Contractual Networks, Inter-Firm Cooperation and the Small Business Act’ held at the European University Institute, Fiesole, Italy on 31 October–1 November 2008. We wish to thank Fabrizio Cafaggi, Marcello Messori and workshop participants for comments and discussions. 1 Distinguished examples include Copeland and Weston...
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