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Are good or bad borrowers discouraged from applying for loans? Evideance from US small business credit markets
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Han, Liang, Fraser, Stuart and Storey, D. J. (2009) Are good or bad borrowers discouraged from applying for loans? Evideance from US small business credit markets. Journal of Banking & Finance, Vol.33 (No.2). pp. 415-424. doi:10.1016/j.jbankfin.2008.08.014 ISSN 0378-4266.
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Official URL: http://dx.doi.org/10.1016/j.jbankfin.2008.08.014
Abstract
This paper takes the concept of a discouraged borrower originally formulated by Kon and Storey [Kon, Y., Storey, D.J., 2003. A theory of discouraged borrowers. Small Business Economics 21, 37-49] and examines whether discouragement is an efficient self-rationing mechanism, Using US data it finds riskier borrowers have higher probabilities of discouragement, which increase with longer financial relationships, suggesting discouragement is an efficient self-rationing mechanism. It also finds low risk borrowers are less likely to be discouraged in concentrated markets than in competitive markets and that, in concentrated markets, high risk borrowers are more likely to be discouraged the longer their financial relationships. We conclude discouragement is more efficient in concentrated, than in competitive, markets. (c) 2008 Elsevier B.V. All rights reserved.
| Item Type: | Journal Article | ||||
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| Subjects: | H Social Sciences > HG Finance H Social Sciences > HC Economic History and Conditions |
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| Divisions: | Faculty of Social Sciences > Warwick Business School > Centre for Small & Medium-Sized Enterprises Faculty of Social Sciences > Warwick Business School |
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| Journal or Publication Title: | Journal of Banking & Finance | ||||
| Publisher: | Elsevier Science BV | ||||
| ISSN: | 0378-4266 | ||||
| Official Date: | February 2009 | ||||
| Dates: |
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| Volume: | Vol.33 | ||||
| Number: | No.2 | ||||
| Number of Pages: | 10 | ||||
| Page Range: | pp. 415-424 | ||||
| DOI: | 10.1016/j.jbankfin.2008.08.014 | ||||
| Status: | Peer Reviewed | ||||
| Publication Status: | Published | ||||
| Access rights to Published version: | Restricted or Subscription Access |
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