How Do Banks Pick Safer Ventures? A Theory Relating the Importance of Risk Aversion and Collateral to Interest Margins and Credit Rationing
Author
Abstract
Suggested Citation
Download full text from publisher
References listed on IDEAS
- Blanchflower, David G & Oswald, Andrew J, 1998.
"What Makes an Entrepreneur?,"
Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
- Blanchflower, D.G. & Oswald, A., 1991. "What Makes an Entrepreneur?," Economics Series Working Papers 99125, University of Oxford, Department of Economics.
- Burke, Andrew E & FitzRoy, Felix R & Nolan, Michael A, 2000. "When Less Is More: Distinguishing between Entrepreneurial Choice and Performance," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 62(5), pages 565-587, December.
- Bester, Helmut, 1987. "The role of collateral in credit markets with imperfect information," European Economic Review, Elsevier, vol. 31(4), pages 887-899, June.
- Boot, Arnoud W A & Thakor, Anjan V & Udell, Gregory F, 1991. "Secured Lending and Default Risk: Equilibrium Analysis, Policy Implications and Empirical Results," Economic Journal, Royal Economic Society, vol. 101(406), pages 458-472, May.
- Besanko, David & Thakor, Anjan V., 1987.
"Competitive equilibrium in the credit market under asymmetric information,"
Journal of Economic Theory, Elsevier, vol. 42(1), pages 167-182, June.
- David Besanko & Anjan V. Thakor, 2004. "Competitive Equilibrium in the Credit Market under Asymmetric Information," Finance 0411045, University Library of Munich, Germany.
- de Meza, David & Southey, Clive, 1996.
"The Borrower's Curse: Optimism, Finance and Entrepreneurship,"
Economic Journal, Royal Economic Society, vol. 106(435), pages 375-386, March.
- De Meza, D. & Southey, C., 1995. "The Borrower's Curse: Optimism, Finance and Enterpreneurship," Discussion Papers 9502, University of Exeter, Department of Economics.
- Burke, Andrew E & FitzRoy, Felix R & Nolan, Michael A, 2002. "Self-Employment Wealth and Job Creation: The Roles of Gender, Non-pecuniary Motivation and Entrepreneurial Ability," Small Business Economics, Springer, vol. 19(3), pages 255-270, November.
- Bester, Helmut, 1985. "Screening vs. Rationing in Credit Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 75(4), pages 850-855, September.
- Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56(4), pages 279-279.
- Churchill, Neil C. & Lewis, Virginia L., 1986. "Bank lending to new and growing enterprises," Journal of Business Venturing, Elsevier, vol. 1(2), pages 193-206.
- Cressy, Robert, 1996. "Are Business Startups Debt-Rationed?," Economic Journal, Royal Economic Society, vol. 106(438), pages 1253-1270, September.
- Andrew E. Burke & Felix R. FitzRoy & Michael A. Nolan, 2000. "When Less is More: Distinguishing Between Entrepreneurial Choice and Performance," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 62(5), pages 565-587, December.
- Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-827, August.
- Simon C. Parker, 2002. "Do Banks Ration Credit to New Enterprises? And Should Governments Intervene?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(2), pages 162-195, May.
- David de Meza & David C. Webb, 1987. "Too Much Investment: A Problem of Asymmetric Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(2), pages 281-292.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
Cited by:
- Linda Bergset, 2015. "The Rationality and Irrationality of Financing Green Start-Ups," Administrative Sciences, MDPI, vol. 5(4), pages 1-26, November.
- Reabetswe Kgoroeadira & Andrew Burke & André Stel, 2019. "Small business online loan crowdfunding: who gets funded and what determines the rate of interest?," Small Business Economics, Springer, vol. 52(1), pages 67-87, January.
- André van Stel & Kashifa Suddle & Andrew Burke & Chantal Hartog, 2008. "How does Entrepreneurial Activity Affect the Supply of Business Angels?," Scales Research Reports H200813, EIM Business and Policy Research.
- Andrew Burke & André Stel & Chantal Hartog & Abdel Ichou, 2014. "What determines the level of informal venture finance investment? Market clearing forces and gender effects," Small Business Economics, Springer, vol. 42(3), pages 467-484, March.
- Andrew Burke & Stuart Fraser & Francis J. Greene, 2010. "The Multiple Effects of Business Planning on New Venture Performance," Journal of Management Studies, Wiley Blackwell, vol. 47(3), pages 391-415, May.
Most related items
These are the items that most often cite the same works as this one and are cited by the same works as this one.- Parker, Simon C, 2002. "Do Banks Ration Credit to New Enterprises? And Should Governments Intervene? President's Lecture Delivered at the Annual General Meeting of the Scottish Economic Society 4-5 September 2001," Scottish Journal of Political Economy, Scottish Economic Society, vol. 49(2), pages 162-195, May.
- Coco, G. & Pignataro, G., 2011. "Perverse cross-subsidization in the credit market," Working Papers 11/01, Department of Economics, City University London.
- Andrew Burke & Felix FitzRoy & Michael Nolan, 2008.
"What makes a die-hard entrepreneur? Beyond the ‘employee or entrepreneur’ dichotomy,"
Small Business Economics, Springer, vol. 31(2), pages 93-115, August.
- Burke, Andrew & FitzRoy, Felix & Nolan, Michael A., 2006. "What Makes a Die-Hard Entrepreneur? Beyond the ‘Employee or Entrepreneur’ Dichotomy," IZA Discussion Papers 2307, Institute of Labor Economics (IZA).
- Coco, Giuseppe, 1999.
"Collateral, heterogeneity in risk attitude and the credit market equilibrium,"
European Economic Review, Elsevier, vol. 43(3), pages 559-574, March.
- Coco, Guiseppe, 1997. "Collateral, Heterogeneity in Risk Attitude and the Credit Market Equilibrium," Discussion Papers 9702, University of Exeter, Department of Economics.
- Berger, Allen N. & Espinosa-Vega, Marco A. & Frame, W. Scott & Miller, Nathan H., 2011.
"Why do borrowers pledge collateral? New empirical evidence on the role of asymmetric information,"
Journal of Financial Intermediation, Elsevier, vol. 20(1), pages 55-70, January.
- Allen N. Berger & Marco A. Espinosa-Vega & W. Scott Frame & Nathan H. Miller, 2007. "Why do borrowers pledge collateral? new empirical evidence on the role of asymmetric information," FRB Atlanta Working Paper 2006-29, Federal Reserve Bank of Atlanta.
- André van Stel & Kashifa Suddle & Andrew Burke & Chantal Hartog, 2008. "How does Entrepreneurial Activity Affect the Supply of Business Angels?," Scales Research Reports H200813, EIM Business and Policy Research.
- Blanchflower, David G. & Shadforth, Chris, 2007.
"Entrepreneurship in the UK,"
Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 3(4), pages 257-364, July.
- Blanchflower, David G. & Shadforth, Chris, 2007. "Entrepreneurship in the UK," IZA Discussion Papers 2818, Institute of Labor Economics (IZA).
- Pozzolo, Alberto Franco, 2004.
"The Role of Guarantees in Bank Lending,"
Economics & Statistics Discussion Papers
esdp04021, University of Molise, Department of Economics.
- Alberto Franco Pozzolo, 2004. "The role of guarantees in bank lending," Temi di discussione (Economic working papers) 528, Bank of Italy, Economic Research and International Relations Area.
- Giuseppe Coco & Giuseppe Pignataro, 2013. "Unfair credit allocations," Small Business Economics, Springer, vol. 41(1), pages 241-251, June.
- Andrew Henley, 2005. "Job Creation by the Self-employed: The Roles of Entrepreneurial and Financial Capital," Small Business Economics, Springer, vol. 25(2), pages 175-196, September.
- Liang Han & Stuart Fraser & David J. Storey, 2009. "The Role of Collateral in Entrepreneurial Finance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 36(3-4), pages 424-455.
- José María Millán & Emilio Congregado & Concepción Román, 2010.
"Determinants of Self-Employment Dynamics and their Implications on Entrepreneurial Policy Effectiveness,"
Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 72, pages 45-76.
- Millán, José María & Congregado, Emilio & Román, Concepción, 2010. "Determinants of Self-Employment Dynamics and their Implications on Entrepreneurial Policy Effectiveness," Revista Lecturas de Economía, Universidad de Antioquia, CIE, August.
- Marta Coelho & David de Meza & Diane Reyniers, 2004.
"Irrational Exuberance, Entrepreneurial Finance and Public Policy,"
International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(4), pages 391-417, August.
- Coelho, Marta & de Meza, David & Reyniers, Diane J., 2004. "Irrational exuberance, entrepreneurial finance and public policy," LSE Research Online Documents on Economics 17279, London School of Economics and Political Science, LSE Library.
- Niinimäki, Juha-Pekka, 2018. "Collateral in credit rationing in markets with asymmetric information," The Quarterly Review of Economics and Finance, Elsevier, vol. 68(C), pages 97-102.
- HONJO Yuji & ONO Arito & TSURUTA Daisuke, 2019. "The Effect of Physical Collateral and Personal Guarantees on Business Start-ups," Discussion papers 19087, Research Institute of Economy, Trade and Industry (RIETI).
- Wim Naudé, 2008. "Entrepreneurship in Economic Development," WIDER Working Paper Series RP2008-20, World Institute for Development Economic Research (UNU-WIDER).
- Block, Jörn & Brockmann, Heiner & Klandt, Heinz & Kohn, Karsten, 2008. "Gründungshemmnisse in Marktmechanismen und Marktumfeld: Facetten empirischer Evidenz [Start-up Barriers in Germany: A Review of the Empirical Literature]," MPRA Paper 9358, University Library of Munich, Germany.
- Zhang, Xuan & Zhang, Yongmin & Scheffel, Eric & Zhao, Yang, 2022. "A key driver for the mixed relationship between loan risk premiums and collateral: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 83(C).
- Robert W. Fairlie & Javier Miranda, 2017.
"Taking the Leap: The Determinants of Entrepreneurs Hiring Their First Employee,"
Journal of Economics & Management Strategy, Wiley Blackwell, vol. 26(1), pages 3-34, February.
- Fairlie, Robert W. & Miranda, Javier, 2016. "Taking the Leap: The Determinants of Entrepreneurs Hiring their First Employee," IZA Discussion Papers 9848, Institute of Labor Economics (IZA).
- Fairlie, Robert W & Miranda, Javier, 2016. "Taking the Leap: The Determinants of Entrepreneurs Hiring Their First Employee," Santa Cruz Department of Economics, Working Paper Series qt7mp406jc, Department of Economics, UC Santa Cruz.
- Robert W. Fairlie & Javier Miranda, 2016. "Taking the Leap: The Determinants of Entrepreneurs Hiring their First Employee," Working Papers 16-48, Center for Economic Studies, U.S. Census Bureau.
- Robert W. Fairlie & Javier Miranda, 2016. "Taking the Leap: The Determinants of Entrepreneurs Hiring their First Employee," NBER Working Papers 22428, National Bureau of Economic Research, Inc.
- Fairlie, Robert & Miranda, Javier, 2016. "Taking the Leap: The Determinants of Entrepreneurs Hiring their First Employee," Santa Cruz Department of Economics, Working Paper Series qt3z2945nj, Department of Economics, UC Santa Cruz.
- Robert W. Fairlie & Javier Miranda, 2016. "Taking the Leap: The Determinants of Entrepreneurs Hiring their First Employee," CESifo Working Paper Series 5836, CESifo.
- Uschi Backes-Gellner & Arndt Werner, 2003. "Entrepreneurial Signaling: Success Factors for Innovative Start-Ups," Working Papers 0055, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Mar 2004.
More about this item
Keywords
Bank; Adverse Selection; Risk Aversion; Collateral; Credit Rationing;All these keywords.
JEL classification:
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
Statistics
Access and download statisticsCorrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pep:journl:v:8:y:2003:i:2:p:13-24. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Craig Everett (email available below). General contact details of provider: https://edirc.repec.org/data/bapepus.html .
Please note that corrections may take a couple of weeks to filter through the various RePEc services.