Prior studies have shown that newly public firms exhibit a high degree of uncertainty and asymmetric information, with few reliable sources of information. These findings suggest that investors could benefit if some independent party is able to assess the quality of a newly public firm. Since...

We use data from the World Bank's Enterprise Surveys to test the importance of governance to the availability of credit. We model the credit-allocation process for SMEs in three steps. Based upon these steps, we classify small businesses into four groups based upon their credit needs – firms...

This paper examines the characteristics of financial institutions that provide financing to new firms using a unique firm-bank match-level dataset of more than 3,000 unlisted small and medium-sized enterprises (SMEs) incorporated in Japan. We employ a within-firm estimator that perfectly...

We use loan-level data to study how the organizational structure of banks impacts small business lending. We find that decentralized banks ― where branch managers have greater autonomy over lending decisions ― give larger loans to small firms and those with “soft information”. However,...

This paper compares the loans granted to male and female entrepreneurs by a French microfinance institution (MFI). The sample period is split in two: before and after the MFI implemented France's regulatory EUR 10,000 loan ceiling. In the first period, the MFI does not co-finance projects with...

Regulatory loan ceilings are commonly found in the prosocial lending sector, yet they can have unintended perverse effects. By mitigating the risk of adverse selection, loan caps catalyze co-financing arrangements between subsidized lenders and commercial banks. These arrangements can, in turn,...

This paper examines whether methodological deficiencies in the literature on discrimination in small business credit markets have a significant impact on the estimation of discrimination and provides a preliminary investigation into the causes of discrimination in these markets. We find...

Small and medium enterprises (SMEs) stimulate domestic demand through job creation, innovation, and competition; thus, they can be a driving force behind a resilient national economy. In addition, SMEs involved in global production supply chains have the potential to encourage international...

Previous research on relationship lending has paid very little attention to the role of trust. Trust might be ex-pected to reduce agency costs, perceived credit risk and thus the request for personal collateral. Trustworthiness is associated with three attributes of SME owner/managers’:...

By employing a sample of 20,956 observations of non-financial SMEs headquartered in the Euro area, between 2009 and 2015, we test whether young businesses are more likely to face credit rejections from lenders than their older peers. Our findings appear to confirm our suspicions that new...