Banks' risk assessment of Swedish SMEs

Building on the literatures on asymmetric information and risk taking, this paper applies conjoint experiments to investigate lending officers' probabilities of supporting credit to established or existing SMEs. Using a sample of 114 Swedish lending officers, we test hypotheses concerning how information on the borrower's ability to repay the loan; alignment of risk preferences; and risk sharing affect their willingness to grant credit. Results suggest that features that reduce the risk to the bank and shift the risk to the borrower have the largest impact. The paper highlights the interaction between factors that influence the credit decision. Implications for SMEs, banks and research are discussed

Collateral Quality and Loan Default Risk: The Case of Vietnam

In the transition economy of Vietnam, financial market is dominated by banking sector but commercial banks heavily rely on collateral-based lending. While the relationship between collateral and implied credit risk is still in debate, this paper provides additional empirical evidence regarding the heterogeneous effects and transmission channels of collateral characteristics on loan delinquency. Applying instrumental variable probit analysis on a unique dataset of 2295 internal loan accounts in Vietnam, we find the significantly negative impact of collateral quality on the probability of default of consumer loans, supporting the dominance of borrower selection and risk-shifting over lender selection effects. The finding implies that high-quality collateral not only signals more credible borrower but also fosters good behavior in using loan, enabling bank to mitigate adverse selection and moral hazard problems

The Internet as a Small Business E-Commerce Ecosystem.

The purpose of this chapter is to analyse how the ecosystem concept can be applied to small businesses and how the Internet and e-commerce can help SMEs harness the required resources to enhance their competitive performance in the marketplace. The chapter will investigate the wide variety of e-commerce applications that are available to small businesses to help address the issue of limited resources. It will provide an ecosystem map illustrating how each functional area of a small business can utilise Internet e-commerce applications to enhance their resource base. The chapter also explores the opportunities and threats that the e-commerce ecosystem model poses for small, medium-sized enterprises (SMEs). This is based upon empirical research consisting of three focus group interviews undertaken with small and medium-sized retail service firms located in the Herefordshire and Worcestershire regions of the United Kingdom in January–February 2014

Inspired or foolhardy: sensemaking, confidence and entrepreneurs' decision-making.

The purpose of this paper is to investigate the role of confidence in how both new and experienced entrepreneurs interpret and make sense of their business environment to inform decision-making. We illustrate our conceptual arguments with descriptive results from a large-scale (n = 6289) survey on entrepreneurs' perception of business performance and their decisions taken at a time of uncertainty in an economic downturn. Quantitative findings are stratified along experiential lines to explore heterogeneity in entrepreneurial decision-making and directly inform our conceptual arguments, while qualitative data from open questions are used to explain the role of confidence. Newer entrepreneurs are found to be more optimistic in the face of environmental risk, which impacts on their decision-making and innovative capabilities. However, the more experienced entrepreneurs warily maintain margin and restructure to adapt to environmental changes. Instead of looking directly at the confidence of individuals, we show how confidence impacts sensemaking, and ultimately, decision-making. These insights inform research on the behaviour of novice and experienced entrepreneurs in relation to innovative business activities. Specifically, blanket assumptions on the role of confidence may be misplaced as its impact changes with experience to alter how entrepreneurs make sense of their environment

Dirty and 40 days in the wilderness: Eliciting childbirth and postnatal cultural practices and beliefs in Nepal.

Background: Pregnancy and childbirth are socio-cultural events that carry varying meanings across different societies and cultures. These are often translated into social expectations of what a particular society expects women to do (or not to do) during pregnancy, birth and/or the postnatal period. This paper reports a study exploring beliefs around childbirth in Nepal, a low-income country with a largely Hindu population. The paper then sets these findings in the context of the wider global literature around issues such as periods where women are viewed as polluted (or dirty even) after childbirth. Methods: A qualitative study comprising five in-depth face-to-face interviews and 14 focus group discussions with mainly women, but also men and health service providers. The qualitative findings in Nepal were compared and contrasted with the literature on practices and cultural beliefs related to the pregnancy and childbirth period across the globe and at different times in history. Results: The themes that emerged from the analysis included: (a) cord cutting & placenta rituals; (b) rest & seclusion; (c) purification, naming & weaning ceremonies and (d) nutrition and breastfeeding. Physiological changes in mother and baby may underpin the various beliefs, ritual and practices in the postnatal period. These practices often mean women do not access postnatal health services. Conclusions: The cultural practices, taboos and beliefs during pregnancy and around childbirth found in Nepal largely resonate with those reported across the globe. This paper stresses that local people’s beliefs and practices offer both opportunities and barriers to health service providers. Maternity care providers need to be aware of local values, beliefs and traditions to anticipate and meet the needs of women, gain their trust and work with them

The Importance of Equity Finance for R&D Activity – Are There Differences Between Young and Old Companies?

This paper analyzes the importance of equity finance for the R&D activity of small and medium-sized enterprises. We use information on almost 6000 German SMEs from a company survey. Using the intensity of banking competition at the district level as instrument to control for endogeneity, we find that a higher equity ratio is conducive to more R&D for young but not for old companies. Equity may be a constraining factor for young companies which have to rely on the original equity investment of their owners since they have not yet accumulated retained earnings and can relay less on outside financing. The positive influence is found for R&D intensity but not for the decision whether to perform R&D. Equity financing is therefore especially important for the most innovative, young companies

The human capital transition and the role of policy

Along with information and communication technology, infrastructure, and the innovation system, human capital is a key pillar of the knowledge economy with its scope for increasing returns. With this in mind, the purpose of this chapter is to investigate how industrialized economies managed to achieve the transition from low to high levels of human capital. The first phase of the human capital transition was the result of the interaction of supply and demand, triggered by technological change and boosted by the demands for (immaterial) services. The second phase of the human capital transition (i.e., mass education) resulted from enforced legislation and major public investment. The state’s aim to influence children’s beliefs appears to have been a key driver in public investment. Nevertheless, the roles governments played differed according to the developmental status and inherent socioeconomic and political characteristics of their countries. These features of the human capital transition highlight the importance of understanding governments’ incentives and roles in transitions