Do your Rivals Enhance your Access to Credit? Theory and Evidence

We present a model where the level of collateralized credit available to borrowers depends upon their product market structure. We \u85nd that a larger number of competitors in a Cournot industry with positive probability of bankruptcy may increase credit availability by enhancing the expected resale value of the collateralized productive assets. We also show this bene\u85t of competition is negatively a¤ected by the existence of outsiders willing to bid for the insidersproductive assets. We test our theoretical predictions exploiting information on the access to \u85nance of small and medium Italian \u85rms in the period 2004-2006 and \u85nd supportive evidence. JEL classi\u85cation: D22 (Firm Behavior: Empirical Analysis); L13 (Oligopoly); G33 (Liquidation)