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Interest Rate Premia on UK Small‐Firm Bank Borrowings: A Research Note

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  • Kevin Keasey
  • Robert Watson

Abstract

This research note examines empirically the determinants of bank interest rate premia for a sample of UK small firms over the period 1986 to 1991. A number of testable hypotheses are formulated regarding the relationship between interest rate premia and a number of firm‐specific risk and cost factors. The empirical results indicate that interest rate premia are significantly related to several of the firm‐specific cost and risk factors. These results suggest that there has been some attempt to incorporate into loan pricing decisions both the direct costs associated with individual loan advances and the specific risk characteristics of the borrower.

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  • Kevin Keasey & Robert Watson, 2000. "Interest Rate Premia on UK Small‐Firm Bank Borrowings: A Research Note," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 27(1‐2), pages 247-259, January.
    • Handle: RePEc:bla:jbfnac:v:27:y:2000:i:1-2:p:247-259
    DOI: 10.1111/1468-5957.00312
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    Cited by:

    1. Boris F. Blumberg & Wilko A. Letterie, 2008. "Business Starters and Credit Rationing," Small Business Economics, Springer, vol. 30(2), pages 187-200, February.
    2. Leo De Haan & Elmer Sterken, 2006. "The impact of monetary policy on the financing behaviour of firms in the Euro area and the UK," The European Journal of Finance, Taylor & Francis Journals, vol. 12(5), pages 401-420.
    3. Letterie, W.A. & Blumberg, B.F., 2002. "Which business starters experience limited access to bank funds?," Research Memorandum 030, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    4. Carole Howorth & Andrea Moro, 2012. "Trustworthiness and interest rates: an empirical study of Italian SMEs," Small Business Economics, Springer, vol. 39(1), pages 161-177, July.
    5. Reabetswe Kgoroeadira & Andrew Burke & André Stel, 2019. "Small business online loan crowdfunding: who gets funded and what determines the rate of interest?," Small Business Economics, Springer, vol. 52(1), pages 67-87, January.

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