Bank interest margins and business start-up collateral: Testing for convexity

Scottish Journal of Political Economy

Volumn 53, Issue 3, 2006, Pages 319-334

  Burke, Andrew ^a   Hanley, Aoife ^b  

^a CRANFIELD UNIVERSITY   (United Kingdom)

^b UNIVERSITY OF NOTTINGHAM   (United Kingdom)

Author keywords

Asymmetric information; Bank lending; Credit constraints

Indexed keywords

BANKING; CAPITAL; CREDIT PROVISION; ENTREPRENEUR; FINANCIAL POLICY; INDUSTRIAL INVESTMENT; INTEREST RATE; LENDING BEHAVIOR;

EID: 33748460289     PISSN: 00369292     EISSN: 14679485     Source Type: Journal    
DOI: 10.1111/j.1467-9485.2006.00382.x     Document Type: Article

References (24)

1. Berger, A. and Udell, G. (1990). Collateral, loan quality and bank risk. Journal of Monetary Economics, 25, pp. 21-42.
2. Berger, A. N. and Udell, G. F. (1995). Relationship lending and lines of credit in small firm finance. Journal of Business, 68, 3, pp. 351-81.
3. Besanko, D. and Thakor, A. (1987). Competitive equilibrium in the credit market under asymmetric information. Journal of Economic Theory, 42, 1, pp. 167-82.
4. Bester, H. (1985). Screening vs. rationing in credit markets with imperfect information. American Economic Review, 75, 4, pp. 850-5.
5. Bester, H. (1987). The role of collateral in credit markets with imperfect information. European Economic Review, 31, 4, pp. 887-99.
6. Binks, M. and Ennew, C. (1998). Private businesses and their banks, Forum of Private Business Bank Survey, University of Nottingham Business School.
7. Burke, A. E., FitzRoy, F. R. and Nolan, M. (2000). When less is more: distinguishing between entrepreneurial choice and performance. Oxford Bulletin of Economic and Statistics, 62, 5, pp. 565-87.
8. Burke, A. and Hanley, A. (2003). How do banks pick safer ventures? A theory relating the importance of risk aversion and collateral to interest margins and credit rationing. Journal of Entrepreneurial Finance and Business Ventures, 8, 2, pp. 13-24.
9. Coco, G. (1999). Collateral, heterogeneity in risk attitude and the credit market equilibrium. European Economic Review, 43, 3, pp. 559-74.
10. Coco, G. (2000). On the use of collateral. Journal of Economic Surveys, 14, 2, pp. 191-214.
11. Cressy, R. (1996). Commitment lending under asymmetric information: theory and tests on UK start-up data. Small Business Economics, 8, 5, pp. 397-408.
12. Cressy, R. (2000). Credit rationing or entrepreneurial risk aversion? An alternative explanation for the Evans and Jovanovic finding. Economics Letters, 66, 2, pp. 235-40.
13. Cressy, R. (2003). Credit constraints on small businesses: Theory versus evidence. International Journal of Entrepreneurship Education, 1, 4, pp. 515-38.
14. Cressy, R. and Toivanen, O. (2001). Is there adverse selection in the credit market? Venture Capital, 3, 3, pp. 215-38.
15. de Meza, D. and Southey, C. (1996). The borrower's curse: Optimism, finance and entrepreneurship. Economic Journal, 106, 435, pp. 375-86.
16. de Meza, D. and Webb, D. (1987). Too much investment: A problem of asymmetric information. Quarterly Journal of Economics, 102, pp. 281-92.
17. Evans, D. and Jovanovic, B. (1989). An estimated model of entrepreneurial choice under liquidity constraints. Journal of Political Economy, 97, 4, pp. 519-35.
18. Greene, W. H. (1997). Econometric Analysis. New York: Prentice Hall.
19. Hanley, A. (2002). Do binary collateral outcome variables proxy collateral levels? The case of collateral from start-ups and existing SMEs. Small Business Economics, 18, 4, pp. 317-31.
20. Leeth, J. and Scott, J. (1989). The incidence of secured debt: Evidence from the small business community. Journal of Financial and Quantitative Analysis, 24, 3, pp. 379-94.
21. Parker, S. (2002). Do banks ration credit to new enterprises? And should governments intervene? Scottish Journal of Political Economy, 49, 2, pp. 162-95.
22. Stiglitz, J. and Weiss, A. (1981). Credit rationing in markets with imperfect information. American Economic Review, 71, 3, pp. 393-410.
23. Taylor, M. (2001). Self-employment and windfall gains in Britain: evidence from panel data. Economica, 68, 272, pp. 539-65.
24. Wette, H. (1983). Collateral in credit rationing in markets with imperfect information: Note. The American Economic Review, 73, 3, pp. 442-5.