Small Business Economics

, Volume 44, Issue 2, pp 411–424 | Cite as

The role of demographics in small business loan pricing

  • Doris NeubergerEmail author
  • Solvig Räthke-Döppner


Demographic change influences the structure of the entrepreneurially active population, which may affect credit risk and financing conditions of small firms. Using bank internal data of small business loans in Germany, we find that the lending relationship plays a larger role for loan prices than demographics. Loan rates decrease with soft information gained through longer loan processing time and a larger number of accounts at the same bank. They increase with hard information about repayment arrears and reminders. Late payments have the largest influence on loan prices. Older entrepreneurs do not seem to be discriminated. Rather, the younger have to pay more because their loans and businesses are smaller and they lack liquidity to pay in time. Marital status and population density of the business district do not matter. This is good news for aging economies with a rising share of elderly and singles and growing disparities between peripheral and agglomerated regions.


Small business finance Savings banks Relationship lending Soft information Demographic change 

JEL classifications

D14 E43 G21 J14 L26 



For helpful comments, we would like to thank Udo Reifner, Franco Fiordelisi, and two anonymous referees. We thank Alexander Conrad and the East German Savings Bank Association (OSV) for providing the data. Financial support by the German Research Foundation (DFG) is gratefully acknowledged.


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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of Rostock18057 RostockGermany
  2. 2.iffHamburgGermany
  3. 3.CERBERomeItaly

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