A note on the role of memory in commercial loan officers' use of accounting and character information

Banks' risk assessment of Swedish SMEs

“…This suggests that banks indeed place strong emphasis on the tangible accounting figures SMEs present. For example, the two most important factors (financial standing and past performance) indicate that the firm has the 22 necessary funds to operate the company (Beaulieu, 1996). Further, financial information is easily accessible and because an external auditor audits them, they are likely to be highly valid and reliable.…”

“…The final decision is often made on a higher hierarchical level, depending on the amount and riskiness, from the local bank office committee to the banks headquarters. This is in contrast to recent developments in the UK, where banks have used credit scoring systems and centralized decision making to help overcome difficulties in assessing risk in small firm loan applicants (Deakins et al, 2004) Concerning the characteristics of the firm affecting the likelihood of receiving funding, an extensive literature review shows that information pertaining to the characteristics of the borrower typically deals with the general risk proclivity of the SME (Sargent et al, 1991;Scherr et al, 1993;Sinkey, 1992), the competence within the business project (Berggren, Lindström & Olofsson, 2001;Harhof & Körting, 1998;Hedeling & Sjöberg, 1993Petersen & Rajan, 1994); the CEO's personal experience (Beaulieu, 1994(Beaulieu, & 1996Cooper et al, 1989Cooper et al, & 1995Davidson & Honig, 2003;Hedelin, 1999;Jankowicz & Hisrich, 1987;Keasey & Watson, 1991;Pettit & Singer, 1985); the extent of strategic planning (Beaulieu, 1994(Beaulieu, & 1996Sinkey, 1992;Berger, 1997Berger, /1998Mintzberg & Waters, 1985;Matthews & Scott, 1995); and the past performance of the firm (Gibson 1993;Kam 1990;Altman 1983); Beaulieu, 1996;Berger & Udell, 1995;Deakins & Hussain, 1994;Tiermey & Truglio, 1997;Uzzi, 1999). For a review of previous research that discusses the use of these factors, the reader is referred to Table 1 in the appendix.…”

“…Third, in order to shift the risk from the bank to the borrower, they can ask for collateral (Bergström and Lennander, 1997;Anderson, 1999), or ensure that the financial standing of the borrower is solid enough to repay the loan should the project fail (Altman, 1983;Sinkey, 1992;Beaulieu, 1994Beaulieu, & 1996.…”

Expertise and Learning: An Alternative Perspective on the Theory–practice Debate

“…The Management Accountant is dismissed for failing to carry out this role. Concern for role is similar to the concern for 'character' which seems to be a necessary part of the expertise of credit rating, for instance, and which is overlooked by novices in their privileging of objective financial information (Beaulieu, 1996). The earlier section on proficiency also provided an explanation for a dismissal of the words of one of the case actors, the Academic, by means of a theory of role enactment (McCall & Simmons, 1966;Burchell et al, 1980;Chua, 1988;Northcott, 1991).…”

P1198: Software for tracing decision behavior in lending to small businesses

“…Viewpoints from experienced loan officers and empirical research findings on lending (Altman, 1983;Andersson, 2001;Argenti, 1976;Beaulieu, 1996;Hedelin & Sjöberg, 1995) ensured a strong fit between the experimental world and the real word (see Beach, 1992).…”