publication . Research . Preprint . 2004

Lending to Small Businesses: The Role of Loan Maturity in Adressing Information Problems

Ortiz-Molina, H.; Penas, M.F.;
Open Access English
  • Published: 01 Jan 2004
  • Publisher: Finance
Abstract
We investigate what determines the maturity of loans to small, informationally opaque businesses.We find that longer maturities are associated with collateral pledges, better financial condition, good credit history, and less informational opacity of the borrower.However, we do not find a positive association between stronger firm-creditor relationships (which can attenuate these information asymmetries) and longer maturities.The evidence suggests that creditors use shorter maturities to induce more frequent renegotiation of contract terms, thus enforcing closer monitoring of more informationally opaque and risky borrowers.Overall, our results are consistent wit...
Subjects
mesheuropmc: social sciences
free text keywords: bank lending, G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages, small business;bank lending;loans;information, loans, small business; bank lending; loans; information, information, G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill, small business, jel:G21, jel:G32
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publication . Research . Preprint . 2004

Lending to Small Businesses: The Role of Loan Maturity in Adressing Information Problems

Ortiz-Molina, H.; Penas, M.F.;