Bank screening technologies and the founder effect: Evidence from European lending relationships

- This research analyzes the role of firms' founders in the bank screening process.
- Firms' founders are associated with a larger request of information during the screening stage.
- Founders are more likely to be required for both hard and soft information.
- The use of screening technologies increases as founders get close to the retirement age.

This article provides evidence on the existence of a founder-effect in the bank screening process for a sample of European family firms. Firstly, we find that firms' founders are significantly associated with a larger request for information during the screening stage. Secondly, founders are more likely to be required for both hard and soft information, whereas nonfamily CEOs are required to provide mostly hard data. Finally, the probability of being subject to deeper and more intense screening procedure is found to increase as founders get close to their retirement age, confirming banks' concerns for founders' succession in family firms.