Discouraged borrowers aftermath of financial crisis: a UK study

Rostamkalaei, Anoosheh

doi:10.1108/jsbed-09-2016-0137

Cited by 17 publications

(8 citation statements)

References 50 publications

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“…due to a fear of rejection) thus underestimating the true extent of credit self-rationing. As such, we find that the overall incidence of borrower discouragement across SMEs is much higher than the levels reported in prior UK studies (Cowling et al, 2016;Rostamkalaei, 2017). 11 The rich nature of the LSBS dataset used in this study suggests that borrower discouragement is a multi-faceted phenomenon with multiple underlying determinants.…”

Section: Discussionmentioning

confidence: 51%

“…Intra-country variations in borrower discouragement are also prevalent. For example, in the UK, Fraser (2004) andFreel et al (2012) find that approximately 8% of SMEs are discouraged borrowers, while Cowling et al (2016) and Rostamkalaei (2017) find a prevalence of borrower discouragement of 2.7% and 2.1%, respectively.…”

Section: Borrower Discouragementmentioning

confidence: 99%

“…In terms of firm-level characteristics, smaller and younger SMEs are significantly more likely to be discouraged borrowers (Han et al, 2009;Freel et al, 2012;Chakravarty and Xiang 2013;Cowling et al, 2016;Mac an Bhaird et al, 2016;Rostamkalaei, 2017). Clearly, newly born firms will have less experience in the credit market and may self-ration as a result of this inexperience (Calabrese et al, 2020).…”

Section: Borrower Discouragementmentioning

confidence: 99%

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Innovation and borrower discouragement in SMEs

2022

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In this paper, we investigate whether innovative small- and medium-sized enterprises (SMEs) are more likely to be discouraged from applying for external finance than non-innovators. These so-called discouraged borrowers are credit worthy SMEs who choose not to apply for external finance despite the fact that this is needed. We find that SMEs undertaking pure product and joint product and process innovation have a significantly higher incidence of borrower discouragement than non-innovative counterparts. Moreover, radical and incremental product innovators are more likely to be discouraged relative to non-innovative counterparts. Innovative activity can increase borrower discouragement for a myriad of reasons including fear of rejection, reluctance to take on additional risk, negative perceptions of the funding application process and perceived negative economic conditions. Overall, our results suggest a need for targeted policy interventions in order to alleviate borrower discouragement within innovative SMEs, as well as a closer alignment between innovation and SME finance policy.

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Section: Discussionmentioning

confidence: 51%

Section: Borrower Discouragementmentioning

confidence: 99%

Section: Borrower Discouragementmentioning

confidence: 99%

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Innovation and borrower discouragement in SMEs

2022

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“…Banks have, however, been criticised for focussing too much on norms and policies at the expense of customer needs (Bick et al, 2004) and for behaving "lazily" by preferring hard, standardized data at the expense of a relationship-oriented approach (Durkin et al, 2013;Rostamkalaei, 2017). Technical advances facilitate the gathering of many forms of customer information, but the results from the present study underline the remaining gaps in building efficient relationships supporting both parties (Durkin and Kerr, 2016).…”

Section: Managerial Implicationsmentioning

confidence: 79%

Bank relationships’ contributions to SME export performance

Lundberg

2019

IJBM

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Purpose The purpose of this paper is to examine to what extent, and in what ways, various types of bank support improve small and medium-sized enterprise (SME) export performance. It contributes to bank marketing and international marketing theory and practice by clarifying bank contributions to SME export performance at the firm level. Design/methodology/approach The study method is an on-site survey, encompassing 135 manufacturing Swedish SMEs. Five hypotheses are tested using ordinary least squares regression. Findings The higher the export performance, the greater the importance attributed to bank funding of international business. The importance of transaction and/or currency services provided by banks for SMEs’ ability to do business abroad was confirmed, but with the important limitation that the effect diminishes as the number of markets increases. Furthermore, the results indicate that SMEs with low export performance attach a high importance to the advisory services that banks can offer regarding international business. No significant results for knowledge sharing or support from bank contacts were found. Practical implications SME managers are encouraged to view banks as potential providers of a diverse set of value-added resources while taking into consideration that some banks will have more developed resources and support policies than others. The study results also assist banks in building effective strategies for enhancing their relationships with SME clients, as it provides detailed information on how SMEs relate different kinds of bank services to their export performance. Originality/value As the first paper to describe SME-perceived relationships between different bank services and export performance, this study informs bank marketing and international marketing theory about bank contributions to SME internationalisation.

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“…As noted previously (Oliveira and von Hippel, 2011;Mainardes et al, 2017), the provision of effective new services should be planned through interaction with customers and real understanding of their needs. However, due to the nature of their activities, banks rarely adopt a relationship-oriented approach (Durkin and Kerr, 2016) because, in order to reduce operational risks, they tend to operate on the basis of rigid criteria and guidelines provided by their reference suprasystems, preferably using standardized and objective data (Durkin et al, 2013;Rostamkalaei, 2017) which often do not allow the full satisfaction of customer needs (Bick et al, 2004).…”

Section: Discussionmentioning

confidence: 99%

Banking services for SMEs' internationalization: evaluating customer satisfaction

Formisano

Tartaglione

Fedele

et al. 2020

TQM

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PurposeThe purpose of this paper is to analyse the quality of banking services provided in support of small- and medium-sized enterprises' (SMEs) internationalization from the customers' perspective.Design/methodology/approachCustomer satisfaction of 50 Italian SMEs with the banking services provided for international activities has been evaluated by adopting the Kano model's continuous and discrete analyses.FindingsResults show which banking services provided for business internationalization are necessary to satisfy customers' expectations, which services customers like having and dislike not having and which services are unexpected by customers creating a high increase in satisfaction when provided.Research limitations/implicationsThis work shows the value of the Kano model in evaluating the non-linear relationship between customer satisfaction and quality of banking services for the international activities of companies. The main limitation of this work is the limited geographical context of the investigation.Practical implicationsThis research suggests banks to transform their role in the relationship with SMEs from mere financiers to active partners committed to their growth abroad by offering a wide range of services not just financial, but also counselling and care professional, thus achieving mutual benefits.Originality/valuePrevious works on banking services and business internationalization are focussed on the transaction costs, information asymmetries and the impact of online banking. This work advances available knowledge by analysing the customer's point of view, evaluating the satisfaction of SMEs which, although more dependent on banks for their expansion abroad than large listed companies, are mostly ignored by literature.

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Discouraged borrowers aftermath of financial crisis: a UK study

Cited by 17 publications

References 50 publications

Innovation and borrower discouragement in SMEs

Innovation and borrower discouragement in SMEs

Bank relationships’ contributions to SME export performance

Banking services for SMEs' internationalization: evaluating customer satisfaction

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