In this first ever study to examine the marginal importance of collateral level "vis-à-vis" reputation in reducing information asymmetry, we find using unique data for UK business credit, that pre-existing reputation is the single-most important determinant in inducing a bank to extend a loan. Moreover, a bank responds positively to higher levels of collateral and negatively to higher credit requests. Similar to Cole (1998), but controlling for collateral level, we find that it helps to have banked with the lender before. Non-trivial information search costs imply an important role for reputation in extending credits. Copyright Blackwell Publishers Ltd, 2005.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 32 (2005-01) Issue (Month): 1-2 () Pages: 415-433 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF