Collateral requirements of SMEs: The evidence from less-developed countries

Elmas Yaldız Hanedar (), Eleonora Broccardo and Flavio Bazzana

Journal of Banking & Finance, 2014, vol. 38, issue C, 106-121

Abstract: This paper aims to investigate the determinants of collateral requirements for loans that are extended to small and medium-sized enterprises in less-developed countries. Our primary data source consists of the results from firms in Eastern Europe and Central Asia from the Business Environment and Enterprise Performance Survey, which is compiled by the World Bank and the European Bank for Reconstruction and Development. The results show that borrower-specific variables are more important than country-specific variables in determining collateral requirements on loan contracts. The strongest evidence in our paper emphasises the importance of borrower risk and loan cost in collateral determinants.

Keywords: Collateral; SMEs; Loan conditions; Two-part models (search for similar items in EconPapers)
JEL-codes: G21 G32 O16 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (52)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:38:y:2014:i:c:p:106-121

DOI: 10.1016/j.jbankfin.2013.09.019

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