Article

Asymmetric Information, Credit Market Condition, and Entrepreneurial Finance

Liang Han and Song Zhang

in The Oxford Handbook of Entrepreneurial Finance

Published in print March 2012 | ISBN: 9780195391244
Published online September 2012 | | DOI: http://dx.doi.org/10.1093/oxfordhb/9780195391244.013.0012

Series: Oxford Handbooks

 Asymmetric Information, Credit Market Condition, and Entrepreneurial Finance

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This article reviews literature on the important role played by asymmetric information in entrepreneurial finance from two perspectives: asymmetric information and relationship lending, and the theoretical modeling of asymmetric information. Then it examines the relationship between capital market conditions and entrepreneurial finance and attempts to answer two questions: Why is the capital market condition important for entrepreneurial finance? and What are the effects of capital market conditions on entrepreneurial financial behavior in terms of discouraged borrowers, cash holding, and the availability and costs of finance?

Keywords: asymmetric information; credit market condition; entrepreneurial finance; theoretical modeling; capital market; cash holding

Article.  9235 words. 

Subjects: Economics ; Financial Markets ; Financial Institutions and Services

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