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Noteworthy contributions have highlighted that human contact is a considerable factor in bank-firm relationships. It allows the acquisition of soft information, which alleviates information asymmetries and increases the use of bank debt. The advent of digital technologies in the information collection process open new horizons and change the role of personal contacts in bank-firm interactions, as entrepreneurs visit bank branches less frequently. This study uses a large sample of Italian SMEs from 2011 to 2020 and finds that the rapid increase and use of digital instruments have reduced the positive influence of physical closeness between banks and SMEs on the indebtedness levels. Interestingly, our study has also found that the COVID-19 crisis did not amplify this moderating effect. Results support theories that human contact is an important factor in bank-firm relationships because it allows the acquisition of soft information, which alleviates information asymmetries and increases the use of bank debt. Our study suggests that close human ties are still extremely relevant and digitalization should be exploited to support the collection of the kind of qualitative soft information that is crucial in debt negotiations. Plain English Summary: The growing integration and digitalization of banks gives rise to a question: are local personal bank-entrepreneur relationships still important for small businesses? We interestingly find that human relationships between the bank and the firm occurring at the local level are important in the soft information collection procedures, positively influencing the amount of debt that SMEs use. In light of such relevance, governments' challenge consists on directing banks toward a system that strengthens the collection of soft information in a digitalized world. In a phygital future, digitalization should thus be exploited to provide banks not only quantitative data, but also qualitative information that support lending decisions. [ABSTRACT FROM AUTHOR]

The promotion of a more stable European banking system has become a priority which, not doubt, will bring important benefits to firms. However, bank stability comes with stronger regulations that could harm the access to finance of small and medium-sized enterprises (SMEs), which are highly dependent on bank financing. We provide new evidence on the association between the stability of a country's banking system and SMEs access to finance through the study of borrower discouragement. We analyze 20,207 observations gathered among 16,382 firms operating in the EU-28 during the period 2011–2018. Applying multilevel methodology, our results show that SMEs operating in countries with more stable banking systems are less likely to be discouraged from applying for a loan. Working to achieve a more stable banking system does not seem to harm the access to finance of SMEs. [ABSTRACT FROM AUTHOR]

Crowdfunding has enabled large crowds to fund innovative projects. This type of funding might tap into the wisdom of crowds who were previously disconnected from the funding process. We distinguish between in-crowd and out-crowd funders (with and without ties to project creators) in order to test for heterogeneity in their information use. Based on the analysis of a large-scale survey amongst project funders, this paper shows that in-crowd investors rely more on information about the project creator than out-crowd investors. Out-crowd investors do not seem to attach more importance to information about the project itself than in-crowd investors, except in the case of donation-based crowdfunding. For financial return crowdfunding, financial information becomes less important once a strong relationship with the project creator is established. Our study allows project creators to target information to specific audiences based on their relationship strength across different types of crowdfunding projects. [ABSTRACT FROM AUTHOR]

Noteworthy contributions have highlighted that human contact is a considerable factor in bank-firm relationships. It allows the acquisition of soft information, which alleviates information asymmetries and increases the use of bank debt. The advent of digital technologies in the information collection process open new horizons and change the role of personal contacts in bank-firm interactions, as entrepreneurs visit bank branches less frequently. This study uses a large sample of Italian SMEs from 2011 to 2020 and finds that the rapid increase and use of digital instruments have reduced the positive influence of physical closeness between banks and SMEs on the indebtedness levels. Interestingly, our study has also found that the COVID-19 crisis did not amplify this moderating effect. Results support theories that human contact is an important factor in bank-firm relationships because it allows the acquisition of soft information, which alleviates information asymmetries and increases the use of bank debt. Our study suggests that close human ties are still extremely relevant and digitalization should be exploited to support the collection of the kind of qualitative soft information that is crucial in debt negotiations., Competing Interests: Conflict of interestThe authors declare no competing interests., (© The Author(s) 2023.)