In this first ever study to examine the marginal importance of collateral level "vis-à-vis" reputation in reducing information asymmetry, we find using unique data for UK business credit, that pre-existing reputation is the single-most important determinant in inducing a bank to extend a loan....

This paper uses unique data and looks at the interest margin for follow-up finance vis-à-vis first round-finance. Applying data for asset values, we examine the substitution between collateral and interest margins. Consistent with the theories of Bester (1985), Besanko and Thakor (1987) and the...