Jens Grunert

Bargaining power and information in SME lending

Small- and medium-sized enterprises (SMEs) are informationally opaque and bank dependent. In SME lending, banks largely rely on soft information, because the scale and scope of hard information are limited. We analyze whether and how hard and soft information affects the borrower’s bargaining power vis-à-vis its bank. We use the fact that, for a given credit rating, certain borrowers obtain better loan terms than others to define measures of relative bargaining power. Using SME loan data from the USA and Germany, we find that more favorable soft information (management skills and character) increases borrower bargaining power. We also show that more favorable soft than hard information improves borrower bargaining power. The results are not driven by manipulation or statistical limitations of the credit ratings. Our study suggests that soft information represents an important and direct determinant of borrower bargaining power, affecting the outcomes of the loan contracting process.

Ansätze zur Messung der Äquivalenz von Ratingsystemen

... Im Falle abgestimmten Verhaltens hängt die Zurechnungsrichtung von der Ausgestaltung des zwischen den Abstimmungsparteien bestehenden Innenverhältnisses ab. Dies kann sowohl zu einer einseitigen wie zu einer wechselseitigen Zurechnung führen. ... Die Zurechnungsausnahme der Einzelfallvereinbarung greift im Falle eines Fortsetzungszusammenhangs nicht ein. Der Fortsetzungszusammenhang entsteht jedenfalls durch eine in unmittelbar aufeinander folgenden Hauptversammlungen zwischen denselben Personen verabredete gemeinsame Stimmrechtsausübung in für die Gesellschaft wichtigen Angelegenheiten.

What Determines Collection Rates of Debt Collection Agencies

We contribute to the literature on debt collection agencies in two ways: First, we present an estimation of the collection rates. The distribution of collection rates exhibits a mean of about 65% and a strong bimodality with peaks at the very ends of the distribution. Second, we investigate potential determinants of the collection success. We find that collection rates are positively related to the exposure at default and to prior debtor-specific collection rates. In contrast, the age of the account and—if applicable—prior experience with the debtor have a negative impact on collection rates.