Most theoretical and empirical models have shown that pledging collateral is a necessary condition for access to finance. In this chapter, we analyse the role of collateral in a cross-country sample of emerging markets compiled from data found in the Business Environment Survey. We investigate the role of collateral both at the firm- and country-specific level, and we provide a robustness analysis on a subsample of the dataset. Our main findings suggest that the role of country-specific factors in emerging economies is more important than the role of firm-specific factors for determining the collateralisation of a loan. However, these results are different if we consider the dimension of the firms. The country-specific factors are more significant for small- and medium-size enterprises, and the firm-specific factors are more important for large firms. These results have important policy implications for mutual guarantee societies. In fact, as information-sharing institutions, mutual guarantee societies could (i) mitigate the risks of banks and (ii) help maximise the capacity to leverage public resources.

Collateral in Emerging Economies

Yaldiz, Elmas;Broccardo, Eleonora;Bazzana, Flavio
2014-01-01

Abstract

Most theoretical and empirical models have shown that pledging collateral is a necessary condition for access to finance. In this chapter, we analyse the role of collateral in a cross-country sample of emerging markets compiled from data found in the Business Environment Survey. We investigate the role of collateral both at the firm- and country-specific level, and we provide a robustness analysis on a subsample of the dataset. Our main findings suggest that the role of country-specific factors in emerging economies is more important than the role of firm-specific factors for determining the collateralisation of a loan. However, these results are different if we consider the dimension of the firms. The country-specific factors are more significant for small- and medium-size enterprises, and the firm-specific factors are more important for large firms. These results have important policy implications for mutual guarantee societies. In fact, as information-sharing institutions, mutual guarantee societies could (i) mitigate the risks of banks and (ii) help maximise the capacity to leverage public resources.
Emerging Markets and the Global Economy. An Handbook
Croydon UK
ACADEMIC PRESS LTD ELSEVIER SCIENCE LTD,
9780124115491
Yaldiz, Elmas; Broccardo, Eleonora; Bazzana, Flavio
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11572/97246
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