SMEs Choice of Main Bank and Organizational Structure: THE ROLE OF SOFT INFORMATION AND OF CREDIT RA

Do small- and medium-sized enterprises (SMEs) and small- and medium-sized industries (SMIs) choose their main bank1 according to the specifi c characteristics of their fi nancial needs? Because the uncertainties related to their activities are extremely diffi cult for external fi nancial partners to understand, this choice is essential if the company wishes to avoid a crippling credit rationing. In fact, the information publicly available on these SMEs is generally insuffi cient to the decision-making process regarding the granting of credit. Further, the investment that would be needed to improve this information often appears too costly compared to the returns that could be made by a potential lender, taking into account the amounts of loans involved. For this reason, this informational investment is rarely taken up (Besanko and Kanatas, 1993). Thus, it is the opacity of these structures that renders them particularly subject to problems of credit rationing (Ang, 1991 and Ang, 1992). The establishment of a privileged relationship with a bank proves to be crucial for the SME, since this partner will be capable of following its development and may even help to ensure its survival in case of diffi culties. We propose in this article to examine the factors determining this choice.