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Collateral requirements of SMEs: The evidence from less-developed countries

Listed author(s):
  • Yaldız Hanedar, Elmas
  • Broccardo, Eleonora
  • Bazzana, Flavio

This paper aims to investigate the determinants of collateral requirements for loans that are extended to small and medium-sized enterprises in less-developed countries. Our primary data source consists of the results from firms in Eastern Europe and Central Asia from the Business Environment and Enterprise Performance Survey, which is compiled by the World Bank and the European Bank for Reconstruction and Development. The results show that borrower-specific variables are more important than country-specific variables in determining collateral requirements on loan contracts. The strongest evidence in our paper emphasises the importance of borrower risk and loan cost in collateral determinants.

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Article provided by Elsevier in its journal Journal of Banking & Finance.

Volume (Year): 38 (2014)
Issue (Month): C ()
Pages: 106-121

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Handle: RePEc:eee:jbfina:v:38:y:2014:i:c:p:106-121
DOI: 10.1016/j.jbankfin.2013.09.019
Contact details of provider: Web page: http://www.elsevier.com/locate/jbf

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