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Information and Bargaining Power: Evidence from SME Lending in China

Author

Listed:
  • Xiao-Yong Wang

    (College of Management and Economics, Tianjin University, Tianjin 300072, China)

  • Wei Zhang

    (College of Management and Economics, Tianjin University, Tianjin 300072, China;
    China Center for Social Computing and Analytics, Tianjin University, Tianjin 300072, China)

  • Xiong Xiong

    (College of Management and Economics, Tianjin University, Tianjin 300072, China;
    China Center for Social Computing and Analytics, Tianjin University, Tianjin 300072, China)

  • Hong-Li Che

    (College of Management and Economics, Tianjin University, Tianjin 300072, China)

  • Dehua Shen

    (Departament d'Economia, Universitat Jaume I, Castellón 12071, Spain)

Abstract

The bank has the access to hard and soft information about small and medium-sized enterprises (SMEs) in order to manage the informational opacity. We carry out the study about the information and bargaining power between lenders and borrowers. Bargaining power is depicted based on more favorable loan rate. The proxy is regressed on hard information, soft information and other variables. We find out that more favorable hard information (Registered Capital and Proceeds of Sale) increases borrowers' bargaining power in China. We also obtain evidence suggesting that the length of borrowers' business affect the bargaining power.

Suggested Citation

  • Xiao-Yong Wang & Wei Zhang & Xiong Xiong & Hong-Li Che & Dehua Shen, 2015. "Information and Bargaining Power: Evidence from SME Lending in China," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 14(04), pages 901-913.
    • Handle: RePEc:wsi:ijitdm:v:14:y:2015:i:04:n:s0219622015500133
    DOI: 10.1142/S0219622015500133
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    References listed on IDEAS

    as
    1. Godbillon-Camus, Brigitte & Godlewski, Christophe, 2005. "Credit risk management in banks: Hard information, soft Information and manipulation," MPRA Paper 1873, University Library of Munich, Germany.
    2. Kai Rudolph, 2006. "Bargaining Power Effects in Financial Contracting," Lecture Notes in Economics and Mathematical Systems, Springer, number 978-3-540-34496-4, December.
    Full references (including those not matched with items on IDEAS)

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