TY  - JOUR
AU  - Garmaise,Mark J.
AU  - Moskowitz,Tobias J.
TI  - Informal Financial Networks: Theory and Evidence
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8874
PY  - 2002
Y2  - April 2002
UR  - http://www.nber.org/papers/w8874
L1  - http://www.nber.org/papers/w8874.pdf
N1  - Author contact info:
Mark Garmaise
Anderson Graduate School of Management
C511 Entrepreneurs Hall
110 Westwood Plaza
Los Angeles, CA 90095-1481
Tel: 310/794-4118
E-Mail: mark.garmaise@anderson.ucla.edu

Tobias J. Moskowitz
Booth School of Business
University of Chicago
5807 S. Woodlawn Ave.
Chicago, IL  60637
Tel: 773/834-2757
Fax: 773/702-0458
E-Mail: tobias.moskowitz@chicagobooth.edu
AB  - We develop a model of informal financial networks and present corroborating evidence by studying the role of professional property brokers in the U.S. commercial real estate market. Our model demonstrates how service intermediaries, who do not supply finance themselves, can facilitate their clients' access to finance via repeated informal relationships with lenders. Empirically, we find that, controlling for endogenous broker selection, hiring a broker strikingly increases the probability of obtaining a bank loan from 40 to 58 percent. Our results demonstrate that even in the U.S., with its well-developed capital markets, informal networks play an important role in controlling access to finance.
ER  -