Credit negotiations

Manthos Delis, Maria Iosifidi, Lampros Pnevmatikos and Emmanuel Tsiritakis

MPRA Paper from University Library of Munich, Germany

Abstract: Credit negotiations can have real economic implications, especially for small firms that heavily rely on bank credit. We hypothesize and empirically establish through textual analysis that three characteristics reflecting credit negotiations are the time interval from loan application to approval or rejection, the probability of applying to another bank, and the probability of reapplying soon after a rejection. We show that poor and female entrepreneurs negotiate less vigorously, and identify several channels backing these effects, most notably education of loan applicants and firm R&D expenses. We also show how the identified effects influence loan approval and firm performance.

Keywords: Credit negotiations; Small firms; Loan applications; Firm performance (search for similar items in EconPapers)
JEL-codes: G0 G02 G2 G21 G30 (search for similar items in EconPapers)
Date: 2023-09-23, Revised 2024-12-12
New Economics Papers: this item is included in nep-ent, nep-inv and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:123003

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