The Role of Private Knowledge in Reducing the Information Wedge: A Research Note
Aoife Hanley and
Journal of Business Finance & Accounting, 2005, vol. 32, issue 1-2, 415-433
In this first ever study to examine the marginal importance of collateral level "vis-à-vis" reputation in reducing information asymmetry, we find using unique data for UK business credit, that pre-existing reputation is the single-most important determinant in inducing a bank to extend a loan. Moreover, a bank responds positively to higher levels of collateral and negatively to higher credit requests. Similar to Cole (1998) , but controlling for collateral level, we find that it helps to have banked with the lender before. Non-trivial information search costs imply an important role for reputation in extending credits. Copyright Blackwell Publishers Ltd, 2005.
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://www.blackwell-synergy.com/doi/abs/10.1111/j.0306-686X.2005.00599.x link to full text (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:bla:jbfnac:v:32:y:2005-01:i:1-2:p:415-433
Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0306-686X
Access Statistics for this article
Journal of Business Finance & Accounting is currently edited by P. F. Pope, A. W. Stark and M. Walker
More articles in Journal of Business Finance & Accounting from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().