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Determinants of the collateralization of credit by small firms

Author

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  • Heather M. Hulburt

    (Department of Finance, College of Business and Economics, West Virginia University, Morgantown, WV 26506-6025, USA)

  • Frederick C. Scherr

    (Department of Finance, College of Business and Economics, West Virginia University, Morgantown, WV 26506-6025, USA)

Abstract

This study presents results of an empirical investigation of debt collateralization using samples of small firms. We examine the fraction of debt that is collateralized and find substantial support for firm size, firm age, and collateral quality as determinants of collateralization. Our results regarding firm size and age are different from prior research and may stem from basic financial differences between small and large firms. We find mixed support for growth opportunities and taxation and little support for default probability, regulation, and form of legal organization as determinants of collateralization. Copyright © 2003 John Wiley & Sons, Ltd.

Suggested Citation

  • Heather M. Hulburt & Frederick C. Scherr, 2003. "Determinants of the collateralization of credit by small firms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 24(6-7), pages 483-501.
    • Handle: RePEc:wly:mgtdec:v:24:y:2003:i:6-7:p:483-501
    DOI: 10.1002/mde.1071
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    References listed on IDEAS

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    Cited by:

    1. Metzger, Georg, 2007. "On the Role of Entrepreneurial Experience for Start-up Financing: An Empirical Investigation for Germany," ZEW Discussion Papers 07-047, ZEW - Leibniz Centre for European Economic Research.
    2. Régis Blazy & Laurent Weill, 2006. "Why Do Banks Ask for Collateral and Which Ones?," LSF Research Working Paper Series 06-07, Luxembourg School of Finance, University of Luxembourg.
    3. An, Can & Pan, Xiaofei & Tian, Gary Gang, 2014. "Ownership structure and collateral requirements: Evidence from China's listed firms," International Review of Financial Analysis, Elsevier, vol. 36(C), pages 168-178.

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