EconStor >
Max-Planck-Institut für Ökonomik, Jena >
Discussion Papers on Entrepreneurship, Growth and Public Policy, MPI für Ökonomik >

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10419/19990
  
Title:Bank interest margins and business start-up collateral : testing for convexity PDF Logo
Authors:Burke, Andrew E.
Hanley, Aoife
Issue Date:2004
Series/Report no.:Papers on entrepreneurship, growth and public policy 4504
Abstract:The paper investigates the relationship between bank interest rate margins and collateral for loans issued to new ventures. The analysis finds a convex U-shaped relationship. The results indicate that while provision of collateral initially reduces bank exposure to risk (through security, more optimal levels of capital and lower moral hazard among entrepreneurs) that beyond a point the positive risk-wealth association gives rise to greater risk taking propensity among entrepreneurs and ultimately higher interest rates. This indicates that a lender's pricing policy may even somewhat help to level the competitive playing field between ventures launched by higher and moderately wealthy entrepreneurs
Subjects:asymetric information
bank lendig
credit constraints
JEL:G21
Document Type:Working Paper
Appears in Collections:Discussion Papers on Entrepreneurship, Growth and Public Policy, MPI für Ökonomik

Files in This Item:
File Description SizeFormat
2004-45.pdf428.24 kBAdobe PDF
No. of Downloads: Counter Stats
Download bibliographical data as: BibTeX
Share on:http://hdl.handle.net/10419/19990

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.