The purpose of this paper is to study the determinants of the use of personal loans in small and medium‐sized enterprises (SMEs).
Personal loans are addressed as a function of the borrower and collateral. To empirically test the hypothesis of this study, a probit model was applied to a group of companies in Bahia Blanca, Argentina, with a previous analysis of the possible effects of sample selection.
Older companies, firms with lower expected growth rates, younger owners, those who seek to create value or growth, and owners who perceive low emotional costs associated with bankruptcy, are less likely to use personal loans to finance their operations.
This study is limited by the availability of data on SMEs in Argentina.
The results highlight the importance of financial aid programmes that focus on SME scarce availability of collateral.
This study makes three principal contributions: first, it investigates the phenomenon of personal loan utilisation in SMEs; second, it analyses financing decisions from both the supply and demand perspectives; and third, it presents a database that includes variables that have not been previously studied in Argentina or other emerging economies.
A previous version of this work was presented at XLIV Región Anual de la Asociación de Economía Política, Universidad Nacional de Cuyo (Mendoza), Argentina, and at Primer Seminario Interuniversitario sobre Desarrollo Productivo Argentino, Universidad de Buenos Aires. The authors thank Juan Carlos Hallak, Laura D’Amato and all attendants for their valuable suggestions.
Briozzo, A. and Vigier, H. (2014), "The role of personal loans in the financing of SMEs", Academia Revista Latinoamericana de Administración, Vol. 27 No. 2, pp. 209-225. https://doi.org/10.1108/ARLA-10-2013-0167Download as .RIS
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