According to the current paradigm of relational financing, companies, having difficulty in transmitting information and are consequently constrained to finance on unfavourable conditions by banks with no access to public financial markets, benefit more from the establishment of a close financial relationship with their banks.Boot [12] defines relationship banking as the provision of financial services by financial intermediary that invests in obtaining customerspecific information, often proprietary in nature and evaluates the profitability of these investments through multiple interactions with the same customer over time and/or across products. The relational finance technology is a technology based on "soft" information produced by the banker through direct and repetitive contacts with the manager of the company. Since this information is difficult to quantify and transmit, relational finance seems ideal for SMEs characterized by a certain degree of informational opacity. Indeed, developing a close banking relationship between the bank and the company appears to be the only way to accumulate "soft" information whereas transactional finance technologies do not depend on close financial relationships. Rather, these technologies depend on "hard" information, that is, financial statements certified by a statutory auditor [10]. In this context, Taketa and Udell [14] classified financing technologies by type of information required "hard" or "soft" (Table 1).In the same way of Jianglini et al. [17] and Kano et al.[10], we will examine whether the effect of reducing the cost of credit by establishing a close financial relationship with the company varies depending on the quality of the information received. This leads us to test the following hypothesis:H1: Reducing cost of credit through close banking relationship is more important for companies with no "hard" information.Keywords: Banks; Small business; Bank-borrower relationships; Loan interest rate IntroductionAsymmetric information and effects on SMEs financing conditions is a research theme that has continued to see more and more interest. Indeed, firms with positive net present value investment opportunities may be deprived of investment because of adverse selection and moral hazard problem [1]. Among suggested solutions by theoretical and empirical literature, we distinguish the technology of relationship lending. Indeed, this type of financing depends on the accumulation of "soft" information over time by the banker. Despite relationship lending has been the subject of considerable recent research interest, the process of relationship lending is not well understood [2]. Understanding relational funding technology requires understanding the likely effect of certain factors. In fact, since the credit officer is responsible for producing this specific information, the agency problems created by the banking organization [2][3][4][5], the degree of banking competition [6][7][8][9] and the reliability of the information disclosed [10] could influence the benefits...
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