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http://hdl.handle.net/1942/1530
Title: | Business collateral and personal commitments in SME lending | Authors: | VOORDECKERS, Wim STEIJVERS, Tensie |
Issue Date: | 2006 | Publisher: | Elsevier | Source: | Journal of Banking and Finance, 30(11). p. 3067-3086 | Abstract: | Using a database of SME credit approvals from a large Belgian bank, this paper extends the empirical evidence on the determinants of collateral by examining the determinants of business collateral simultaneously with the determinants of personal collateral/commitments. Our results suggest that firm and relationship characteristics seem to be more important determinants of collateral/commitment protection than loan and lender characteristics. Family firms are more likely to offer a higher degree of collateral/commitment protection while introducing competition between banks decreases this likelihood. The collateral requirement decreases in the length of the bank-borrower relationship. Furthermore, trade credit seems to have a signalling effect. The ‘lazy banks hypothesis’ was not supported. Our results suggest that beside risk arguments, also commercial arguments help explain the pledging of collateral. Using a continuation-ratio logit model, we discover several differences in the determinants of the collateralisation decision and the determinants of the type of collateral/commitments. | Keywords: | SME lending, Business Collateral, Personal collateral, Personal guarantees | Document URI: | http://hdl.handle.net/1942/1530 | ISSN: | 0378-4266 | e-ISSN: | 1872-6372 | DOI: | 10.1016/j.jbankfin.2006.05.003 | ISI #: | 000242315500007 | Category: | A1 | Type: | Journal Contribution | Validations: | ecoom 2007 |
Appears in Collections: | Research publications |
Files in This Item:
File | Description | Size | Format | |
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business collateral.pdf | Peer-reviewed author version | 228.94 kB | Adobe PDF | View/Open |
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