Risk-Taking, Agency Problem, and Small Business Loan Guarantee: An Application of Option Pricing Theory

Jacky C. So, Rakesh Bharati and Susan Crain
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Jacky C. So: Southern Illinois University
Rakesh Bharati: Southern Illinois University

Journal of Entrepreneurial Finance, 2001, vol. 6, issue 1, 24-43

Abstract: We examine the relationship between the small business loan guarantee and the agency problem of small firms. We then recommend financial instruments or financial contracts that can minimize of eliminate the moral hazard problem.

Keywords: Loan Guarantee; Small Business Lending; Agency Problem; Risk; Small Business; Moral Hazard (search for similar items in EconPapers)
JEL-codes: M13 (search for similar items in EconPapers)
Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:pep:journl:v:6:y:2001:i:1:p:24-43

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