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The Impact of Information Asymmetry on Financial Markets and Hypotheses for Rationing of Assets to Finance for the Small and Medium-Sized Enterprises

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  • Orlin Todorov

Abstract

The aim of the paper is to draw up hypotheses that intend to answer the question why the small and medium sized enterprises are of greater degree affected by the problems of financing than the larger- scale companies. The author makes his assumptions on the basis of some fundamental issues of representatives of the school of the new institutional economists on the problem of information asymmetry like: O. Williamson, Arrow, Akerlof, Stiglitz and Weiss, Bester, Besanko and some others. The analysis also concerns some peculiar features of the small businesses that makes them in a greater degree affected by the uneven distribution of information and hence, in a greater degree affected by the problems of financing.

Suggested Citation

  • Orlin Todorov, 2002. "The Impact of Information Asymmetry on Financial Markets and Hypotheses for Rationing of Assets to Finance for the Small and Medium-Sized Enterprises," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 147-168.
    • Handle: RePEc:bas:econst:y:2002:i:3:p:147-168
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    References listed on IDEAS

    as
    1. Besanko, David & Thakor, Anjan V, 1987. "Collateral and Rationing: Sorting Equilibria in Monopolistic and Competitive Credit Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(3), pages 671-689, October.
    2. Bester, Helmut, 1987. "The role of collateral in credit markets with imperfect information," European Economic Review, Elsevier, vol. 31(4), pages 887-899, June.
    3. Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1989. "The Growth and Failure of U. S. Manufacturing Plants," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(4), pages 671-698.
    4. Hillier, Brian & Ibrahimo, M V, 1993. "Asymmetric Information and Models of Credit Rationing," Bulletin of Economic Research, Wiley Blackwell, vol. 45(4), pages 271-304, October.
    5. Egeln, Jurgen & Licht, Georg & Steil, Fabian, 1997. "Firm Foundations and the Role of Financial Constraints," Small Business Economics, Springer, vol. 9(2), pages 137-150, April.
    6. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    7. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    8. Chan, Yuk-Shee & Kanatas, George, 1985. "Asymmetric Valuations and the Role of Collateral in Loan Agreements," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 17(1), pages 84-95, February.
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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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