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Collateral Requirements of SMEs:The Evidence from Less–Developed Countries

  • Elmas Yaldiz Hanedar

    ()

  • Eleonora Broccardo

    ()

  • Flavio Bazzana

    ()

The main objective of this paper is to investigate the determinants of collateral requirements on loans that are extended to small and medium enterprises (SMEs) in less–developed countries. Our primary data source is the Business Environment and Enterprise Performance Survey (BEEPS) results from Eastern European and Central Asian countries. We observe that country–specific variables are more important than firm–specific variables for determining both the presence of collateral in loan contracts and the collateral to loan value ratios of these contracts. The strongest evidence in our paper addresses the important role that information sharing among lenders plays in the reduction of collateral requirements.

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Paper provided by Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi" in its series Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) with number 12111.

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Length: pages 49
Date of creation: Nov 2012
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Handle: RePEc:mod:wcefin:12111
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