Moral hazard and default risk of SMEs with collateralized loans

José A. Castillo, Andrés Mora-Valencia, Javier Perote

Producción: Contribución a una revistaArtículorevisión exhaustiva

18 Citas (Scopus)

Resumen

This paper examines the failure of small- and medium-sized enterprises (SMEs) by considering both traditional financial ratios and other ratios proposed to capture ‘moral hazard effects’ in the presence of collateral, which lie in the principal-agent relationship between lender and borrower under conditions of asymmetric information. With a new Colombian database and by estimating default probability logit models, we measure the impact of these moral hazard effects on credit risk. We find that low effort and underinvestment variables have a significant impact on default risk and thus moral hazard has an effect on the failure of SMEs with collateralized obligations.

Idioma originalInglés
Páginas (desde-hasta)95-99
Número de páginas5
PublicaciónFinance Research Letters
Volumen26
DOI
EstadoPublicada - sep. 2018

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