Components of credit rationing

Beyhaghi, Mehdi; Firoozi, Fathali; Jalilvand, Abol; Samarbakhsh, Laleh

doi:10.1016/j.jfs.2020.100762

Cited by 20 publications

(4 citation statements)

References 29 publications

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“…Commercial banks' tools for reducing credit losses, such as covenants, strict collateral requirements, credit rationing, loan securitization, lending rates, and loan syndication, have rejected or accepted SMEs' lending requests. Previous studies revealed that CRM significantly impacts CF in SMEs (Aysan & Disli, 2019;Beyhaghi et al, 2020). Our study found that banks are concerned about the long-term survival of agro-processing SMEs, and as a result, they have little faith in the industry and are hesitant to lend to them.…”

Section: Discussion Of Research Resultsmentioning

confidence: 59%

ENABLERS OF BANK CREDIT FLOW TO AGRO-PROCESSING SMEs: THE ROLE OF BANK CREDIT TRANSPARENCY IN TANZANIA

Mwemezi¹,

Senadjki²,

Sea³

2023

MJBE

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This research aimed to determine how bank credit transparency increases the flow of loans by mediating the relationship between credit risk management and credit flow to agro-processing SMEs. Since previous studies favored demand-side transparency, this study aims to fill the research gap by investigating the supply side. Information was gathered using the survey method. 397 Tanzanian bank branches were approached and asked to complete the questionnaire. Partial least square structural equation modeling (PLS-SEM) was applied to analyze the data. The empirical data revealed that information asymmetry and credit risk management negatively influence bank loan flow. Institutional lending structures had a significantly positive effect on bank credit flow. Policymakers and practitioners can use the findings of this study to improve bank credit transparency to borrowers and for the sustainability of agro-processing SMEs.

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Section: Discussion Of Research Resultsmentioning

confidence: 59%

ENABLERS OF BANK CREDIT FLOW TO AGRO-PROCESSING SMEs: THE ROLE OF BANK CREDIT TRANSPARENCY IN TANZANIA

Mwemezi¹,

Senadjki²,

Sea³

2023

MJBE

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“…The literature shows that a deterioration in an enterprise's own view of its credit history, economic outlook, and capital should reduce its access to finance [18][19][20]. In addition, Beyhaghi et al (2020) suggest that decreased profits increase the probability of an enterprise being rationed [21].…”

Section: The Causes Of the Credit Rationing Of Msesmentioning

confidence: 99%

Evolutionary Game Analysis of the Impact of Big Data Credit Technology on the Credit Rationing of Micro and Small Enterprises (MSEs)

Jin,

Zhang,

Lei

2023

JTAER

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Credit rationing hindered the development of MSEs. Big data credit technology creates a great opportunity to address this issue. Then, how does big data credit technology affect and to what extent can it alleviate the credit rationing of MSEs? Based on the bounded rationality economic man hypothesis, the evolutionary game model of banks and MSEs under the traditional mode and big data credit technology are constructed, respectively, in this paper, and the evolutionary trajectory of bank-enterprise credit strategies under the two modes are comparatively analyzed. The results show that it is hard to alleviate the credit rationing of MSEs under the traditional mode. However, under big data credit technology, when the overall credit level of MSEs is high, the credit rationing of MSEs will be effectively alleviated. When the overall credit level of MSEs is too low, it is difficult to determine whether big data credit technology can alleviate the credit rationing of MSEs. In order to verify the feasibility of big data credit technology in alleviating the credit rationing of MSEs, a simulation experiment is conducted to compare the differences in the credit rationing of MSEs with different credit levels under the two credit modes. We found that the credit rationing of MSEs is always lower under big data credit technology than under the traditional mode. Therefore, big data credit technology can effectively alleviate the credit rationing of MSEs under any circumstances. The research provides theoretical support for banks to apply big data credit technology to achieve a win-win situation for both parties.

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“…In terms of why loan guarantee schemes have become the most widespread form of intervention in capital markets relevant to smaller firms across the world (Beck et al, 2010;Dvouletý et al, 2021), we can identify perennial concerns that capital markets do not offer enough funds to smaller and younger firms with good quality projects (Demoussis et al, 2017;Cowling, 2010aCowling, , 2010b, and that this credit rationing negatively impacts on their ability to generate jobs, grow their sales (Dvouletý et al, 2019), introduce new products and services, increase consumer welfare through competition, and to become more productive (Kersten et al, 2017;Cowling et al, 2018a). In crisis periods, their relevance and scale are extended as banks raise their lending standards (their threshold above which a loan is approved) and ration credit more widely (Beyhaghi et al, 2020). However, it is primarily an empirical question whether or not public loan guarantee schemes generate a positive net benefit to the host economy.…”

Section: Loan Guarantee Schemes and Defaultmentioning

confidence: 99%

The hazards of delivering a public loan guarantee scheme: An analysis of borrower and lender characteristics

Cowling

Wilson

Nightingale

et al. 2023

International Small Business Journal: Researching Entrepreneurs

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Using data between 2009 and 2020, we provide a detailed description of the borrowers within the Enterprise Finance Guarantee (EFG) loan portfolio, analyse time to default and how it differs across lender types. For limited companies, we match additional financial and non-financial data from public and proprietary databases and profile the characteristics of EFG companies within the population of limited companies. Employing hazard models we find loans granted to unincorporated businesses by the medium-sized financial institutions are associated with a much lower hazard than those provided by smaller local lending institutions and not-for-profit agencies. Moreover, we find some evidence that loans to limited companies, issued by the big UK banking groups, have a significantly lower default than those from medium-sized financial institutions. Large banks screen out high-risk firms. We argue that smaller lenders are able to price the risks rejected by the larger banks, using a wider range of credit information. JEL codes: G01, G21, L52, D25

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Components of credit rationing

Cited by 20 publications

References 29 publications

ENABLERS OF BANK CREDIT FLOW TO AGRO-PROCESSING SMEs: THE ROLE OF BANK CREDIT TRANSPARENCY IN TANZANIA

ENABLERS OF BANK CREDIT FLOW TO AGRO-PROCESSING SMEs: THE ROLE OF BANK CREDIT TRANSPARENCY IN TANZANIA

Evolutionary Game Analysis of the Impact of Big Data Credit Technology on the Credit Rationing of Micro and Small Enterprises (MSEs)

The hazards of delivering a public loan guarantee scheme: An analysis of borrower and lender characteristics

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