The Price of UK Commercial Credit Lines: A Research Note
Christine Ennew and
Journal of Business Finance & Accounting, 2006, vol. 33, issue 5-6, 932-938
The UK Cruickshank Report (2000) highlighted the potential for market power issues where bank concentration could lead to more expensive credit. Because of the many risk factors influencing the cost of credit, it is difficult to establish whether differences in pricing is a consequence of risk or is due to differential pricing practices among lenders. In this study, we find that even when risk factors are taken into account, considerable variation in pricing among UK lenders remains. Moreover, the lenders with the largest market share in SME finance over the 8 years surveyed, charged significantly higher interest premia. Copyright 2006 The Authors Journal compilation (c) 2006 Blackwell Publishing Ltd.
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