Do National Differences in Social Capital and Corporate Ethical Behaviour Perceptions Influence the Use of Collateral? Cross-Country Evidence

Panagiota Papadimitri, Fotios Pasiouras, Menelaos Tasiou

Journal of Business Ethics · 2021 · Volume 172 · Issue 4

Abstract

We study the impact of social capital and perceptions about corporate ethical behaviour on the use of collateral in corporate borrowing. Using a dataset of more than 17,500 firms operating in over 100 transition and developing countries, we find evidence that country-level social capital and better perceptions about corporate ethical behaviour are negatively associated with the likelihood to pledge collateral. In addition, these country-level characteristics influence the value of collateral relative to the loan value.

Keywords

Social capital, Ethics, Collateral

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