The concentration of creditors: evidence from small businesses

• Autores: L. Han, D. J. Storey, S. Fraser
• Localización: Applied financial economics, ISSN 0960-3107, Vol. 18, Nº. 19-21, 2008, págs. 1647-1656
• Idioma: inglés
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• Resumen

  • 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.