Scalera, Domenico; Zazzaro, Alberto --- "Do Inter-firm Networks Make Access to Finance Easier? Issues and Empirical Evidence" [2011] ELECD 279; in Cafaggi, Fabrizio (ed), "Contractual Networks, Inter-Firm Cooperation and Economic Growth" (Edward Elgar Publishing, 2011)

Book Title: Contractual Networks, Inter-Firm Cooperation and Economic Growth

Editor(s): Cafaggi, Fabrizio

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848448896

Section: Chapter 3

Section Title: Do Inter-firm Networks Make Access to Finance Easier? Issues and Empirical Evidence

Author(s): Scalera, Domenico; Zazzaro, Alberto

Number of pages: 27

Extract:

3. Do inter-firm networks make
access to finance easier? Issues and
empirical evidence*
Domenico Scalera and Alberto Zazzaro

1. INTRODUCTION

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 inter-
firm 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 October­1 ...