大阪大学　数理・データ科学教育研究センター
Center for Mathematical Modeling and Data Science,Osaka University

The Effects of Collateral on SME Performance in Japan

植杉威一郎(一橋大学)

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4. The Effects of Collateral on SME Performance in Japan

大証寄附研究部門セミナーシリーズ 第13回

The Effects of Collateral on SME Performance in Japan

植杉威一郎(一橋大学)

This paper examines how collateral and personal guarantees affect firms’ ex-post performance employing the propensity score matching estimation approach. Based on a unique firm-level panel data set of more than 500 small and medium-sized borrower firms in Japan, we find the following: (1) the increase in profitability and reduction in riskiness of borrowers that provide collateral to lenders are more sizeable than of borrowers that do not; (2) On the other hand, the lending attitude and monitoring frequency of borrowers' main banks do not change significantly at the time of collateral being pledged; and (3) The increase in profitability of collateralized borrowers is driven by cost reductions rather than by sales growth. These findings are consistent with the hypothesis that by providing collateral, borrowers curb their own incentives for moral hazard in order to further enhance their creditworthiness.