Abstract

This article aims to investigate the effects of relationship banking and banking market rivalry on small firm liquidity. Our major objective is to determine how bank market concentration and relationship banking affect the three crucial acts of small business liquidity (cash funds, line-ups of credit, and employment credit), both separately and collectively. Due to their significance for small firm ’s profitability, value, and sustainability, we concentrate on cash assets (Harford et al., 2008; Mach and Wolken, 2011). Despite this, there have been just two prior studies of small firm cash holdings that we are aware of (Garca-Teruel and Martnez-Solano, 2008; Faulkender, 2002). Likewise, even though credit lines remain also a shared source of small firm liquidness (Sufi, 2009), previous findings have normally aimed on credit line practice by large businesses (Acharya et al., 2013).

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