Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
8954557 | Finance Research Letters | 2018 | 5 Pages |
Abstract
This paper examines the failure of small- and medium-sized enterprises (SMEs) by considering both traditional financial ratios and other ratios proposed to capture 'moral hazard effects' in the presence of collateral, which lie in the principal-agent relationship between lender and borrower under conditions of asymmetric information. With a new Colombian database and by estimating default probability logit models, we measure the impact of these moral hazard effects on credit risk. We find that low effort and underinvestment variables have a significant impact on default risk and thus moral hazard has an effect on the failure of SMEs with collateralized obligations.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
José A. Castillo, Andrés Mora-Valencia, Javier Perote,