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The concentration of creditors: Evidence from small businesses

journal contribution
posted on 2023-06-08, 08:39 authored by Liang Han, David Storey, Stuart Fraser
This article examines the determinants of concentration of creditors. The empirical evidence drawn from this article supports the proposition of Bolton and Scharfstein (1996) that for negotiation reasons, high-quality borrowers tend to borrow from multiple sources and is contrary to the theoretical prediction of Bris and Welch (2005). This finding implies the existence of hold-up problems in financing small businesses where information conveyance is difficult between lenders. It is further supported by the evidence that dispersed bank relationships are associated with relationships of a longer history and a closer physical distance to lenders.

History

Publication status

  • Published

Journal

Applied Financial Economics

ISSN

09603107

Issue

20

Volume

18

Page range

1647-1656

Department affiliated with

  • Business and Management Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2012-02-06

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