Lending technology and credit risk under different types of loans to SMEs: Evidence from China

Zhuo-lin Song and Xiao-mei Zhang

International Review of Economics & Finance, 2018, vol. 57, issue C, 43-69

Abstract: This paper analyses lending to small and medium-sized enterprises (SMEs), including the lending technologies used and the default risks for loans of different types using loan data on Chinese unlisted SMEs from 2010 to 2013. We find that both credit loans and third-party-guaranteed loans are examples of transaction lending. However, due to the risk-sharing mechanism, the lending technology used by banks for third-party-guaranteed loans is not a common transaction lending technology. In terms of default risk, there is no significant difference between credit loans and collateralized loans. In contrast, the default risk for third-party-guaranteed loans is higher.

Keywords: Lending technology; Transaction lending; Soft information; Hard information; Default risk (search for similar items in EconPapers)
JEL-codes: G21 G23 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:57:y:2018:i:c:p:43-69

DOI: 10.1016/j.iref.2018.02.012

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