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| Author: | Peltoniemi, J. |
| Title: | Collateral requirements and relationship banking: Empirical evidence from unique Finnish credit-files |
| Journal: | Liiketaloudellinen aikakauskirja
2007 : 4, p. 393-414 |
| Index terms: | banking credit financing small business customer relations |
| Language: | eng |
| Abstract: | This study contributes to the literature by testing borrower risk and collateral requirements (here as: coll-reqs.) with a continuous measurement of the level of collateralization. This paper explores the characteristics (as: chars.) of the role and use of collateral (as: coll.) in bank loans in small business financing. The analyses of the coll. chars. include an original sample of 936 Finnish small businesses. Three groups of variables are formed including firm-, relationship-, and loan-specific chars. Among others, it is found that higher borrower quality (low-risk borrower) is associated with higher coll-reqs. In addition, it is examined whether relationship chars. and coll. are related. It is shown that firms with stronger relationships with the bank receive loans with lower coll-reqs. |
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