Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
1019616 | Journal of Business Venturing | 2009 | 13 Pages |
Abstract
Bank loans are a common source of financing for small firms. While scholars have examined specific conditions that affect small firm loan approval and interest rates, practical questions remain about how these loans are structured to address characteristically acute challenges from asymmetric information. This paper suggests collateral, reputation, and relationship banking each perform unique exchange-organizing tasks, and that small firms systematically use them in predictable combinations. A multiple discriminant analysis of 796 small firm loans suggests four governance bundles are commonly employed in this setting. The implications for managers focus on how loan governance mechanisms are most efficiently bundled together.
Related Topics
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Business and International Management
Authors
Douglas A. Bosse,