Information and Bargaining Power: Evidence from SME Lending in China

Xiao-Yong Wang, Wei Zhang, Xiong Xiong (), Hong-Li Che and Dehua Shen
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Xiao-Yong Wang: College of Management and Economics, Tianjin University, Tianjin 300072, China
Wei Zhang: College of Management and Economics, Tianjin University, Tianjin 300072, China;
Xiong Xiong: College of Management and Economics, Tianjin University, Tianjin 300072, China;
Hong-Li Che: College of Management and Economics, Tianjin University, Tianjin 300072, China

International Journal of Information Technology & Decision Making (IJITDM), 2015, vol. 14, issue 04, 901-913

Abstract: The bank has the access to hard and soft information about small and medium-sized enterprises (SMEs) in order to manage the informational opacity. We carry out the study about the information and bargaining power between lenders and borrowers. Bargaining power is depicted based on more favorable loan rate. The proxy is regressed on hard information, soft information and other variables. We find out that more favorable hard information (Registered Capital and Proceeds of Sale) increases borrowers' bargaining power in China. We also obtain evidence suggesting that the length of borrowers' business affect the bargaining power.

Keywords: Small and medium-sized firms; loan; soft information; bargaining power (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1142/S0219622015500133

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