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Accounting information quality and guaranteed loans: evidence from Japanese SMEs

Author

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  • Hyonok Kim

    (Tokyo Keizai University)

  • Yukihiro Yasuda

    (Hitotsubashi University)

Abstract

We empirically investigate the effects of accounting information quality, as measured by accruals quality, on the use of government guaranteed loans, which we regard as a form of transaction lending. We find that higher accruals quality is associated with higher usage rates of government guaranteed loans, but not with those of nonguaranteed loans, which we consider to constitute relationship lending within the Japanese context. We also find that higher accruals quality is not related to the interest rate for guaranteed loans, but rather is associated with a lower interest rate for nonguaranteed loans. These results indicate that the relevant accounting information is effectively used in screening processes for small- and medium-sized enterprises (SMEs), but that effectiveness varies, depending on the particular lending technology employed.

Suggested Citation

  • Hyonok Kim & Yukihiro Yasuda, 2019. "Accounting information quality and guaranteed loans: evidence from Japanese SMEs," Small Business Economics, Springer, vol. 53(4), pages 1033-1050, December.
    • Handle: RePEc:kap:sbusec:v:53:y:2019:i:4:d:10.1007_s11187-018-0106-5
    DOI: 10.1007/s11187-018-0106-5
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    More about this item

    Keywords

    Accruals quality; Guaranteed loans; Transaction lending; Relationship lending; Interest rates;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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