They would like to thank Holger Görg for helpful comments on an initial draft. The usual disclaimer applies.
The Price of UK Commercial Credit Lines: A Research Note
Article first published online: 2 MAY 2006
Journal of Business Finance & Accounting
Volume 33, Issue 5-6, pages 932–938, June/July 2006
How to Cite
Hanley, A., Ennew, C. and Binks, M. (2006), The Price of UK Commercial Credit Lines: A Research Note. Journal of Business Finance & Accounting, 33: 932–938. doi: 10.1111/j.1468-5957.2006.00603.x
- Issue published online: 2 MAY 2006
- Article first published online: 2 MAY 2006
- (Paper received May 2003, revised version accepted July 2005)
- bank credit costs;
- lender concentration
Abstract: The UK Cruickshank Report (2000) highlighted the potential for market power issues where bank concentration could lead to more expensive credit. Because of the many risk factors influencing the cost of credit, it is difficult to establish whether differences in pricing is a consequence of risk or is due to differential pricing practices among lenders. In this study, we find that even when risk factors are taken into account, considerable variation in pricing among UK lenders remains. Moreover, the lenders with the largest market share in SME finance over the 8 years surveyed, charged significantly higher interest premia.