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Availability of Firms' Information and their Choice of External Credit: Evidence from the Data of Small Firms

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  • Wako Watanabe

Abstract

The main purpose of this paper is to present the empirical findings derived from the data of small firms that the availability of private and public information on the borrowing firm leads to diverse borrowing patterns among firms. Exploring logit models to characterize the firm's choice of a financial source, we find that firms whose information is poorly recorded, or who are publicly less recognized, are more likely to choose institutional lending over trade credit but as the recorded information becomes more organized and firms become more transparent, they tend to graduate to a greater use of trade credit.

Suggested Citation

  • Wako Watanabe, 2004. "Availability of Firms' Information and their Choice of External Credit: Evidence from the Data of Small Firms," ISER Discussion Paper 0616, Institute of Social and Economic Research, Osaka University.
    • Handle: RePEc:dpr:wpaper:0616
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    More about this item

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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