Acceso usuarios
Previous studies argue that banks offer loans to informationally opaque businesses using relationship lending technology. Using survey data of small businesses in Japan, we show that informationally opaque and financially weak firms that do not have lending relationships use high interest rate nonbank loans because of low availability of bank credit. Furthermore, we show that nonbank loan applicants are likely to incur operating losses and default. These results imply that nonbanks have difficulty avoiding the information problem because borrowers have uninformative financial statements and weak financial conditions.
