Abstract

http://ssrn.com/abstract=926975
 
 

References (30)



 
 

Citations (11)



 


 



Information Verifiability, Bank Organization, Bank Competition and Bank-Borrower Relationships


Masaji Kano


Osaka Prefecture University

Hirofumi Uchida


Kobe University - Graduate School of Business Administration

Gregory F. Udell


Indiana University Bloomington - Department of Finance

Wako Watanabe


Osaka University - Institute of Social and Economic Research (ISER)

February 2006


Abstract:     
This paper investigates whether the benefits of bank-borrower relationships differ depending on three factors identified in the theoretical literature: verifiability of information, bank size and complexity, and bank competition. We extend the current literature by analyzing how relationship lending affects loan contract terms and credit availability in an empirical model that simultaneously accounts for all three of these factors. Also, our unique data set of Japanese SMEs allows us to examine for the first time using micro firm data the value of information verifiability in the form of audited financial statements in setting loan contract terms. We find that firms benefit most from bank-borrower relationships when they do not have audited financial statements and when they borrow from small banks in less competitive markets, which is consistent with a number of different theoretical studies.

Number of Pages in PDF File: 35

Keywords: Bank-Borrower Relationships, Small Business, Loan Interest Rate, Collateral, Credit Availability

JEL Classification: G21, G31, L11, L13, L22

working papers series


Download This Paper

Date posted: August 30, 2006  

Suggested Citation

Kano, Masaji and Uchida, Hirofumi and Udell, Gregory F. and Watanabe, Wako, Information Verifiability, Bank Organization, Bank Competition and Bank-Borrower Relationships (February 2006). Available at SSRN: http://ssrn.com/abstract=926975 or http://dx.doi.org/10.2139/ssrn.926975

Contact Information

Masaji Kano
Osaka Prefecture University ( email )
1-1 Gakuen-Cho
Sakai, Osaka 599-8531
Japan
Hirofumi Uchida (Contact Author)
Kobe University - Graduate School of Business Administration ( email )
2-1, Rokkodai-cho, Nada-ku
Kobe, 657-8501
Japan
81-78-803-6949 (Phone)
HOME PAGE: http://www.b.kobe-u.ac.jp/~uchida
Gregory F. Udell
Indiana University Bloomington - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
Wako Watanabe
Osaka University - Institute of Social and Economic Research (ISER) ( email )
6-1 Mihogaoka
Ibaraki, Osaka 567-0047
Japan
Feedback to SSRN


Paper statistics
Abstract Views: 1,408
Downloads: 264
Download Rank: 63,066
References:  30
Citations:  11

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.687 seconds