Search results

The purpose of this paper is to examine the various factors that influence a small and medium enterprise’s (SME) decision to apply for bank loans.

Data from survey responses of 145 SMEs from Selangor and the Federal Territory of Kuala Lumpur are used for this purpose. Exploratory factor analysis, logistic regression and SEM-PLS are used to analyze the data.

The findings from the survey show that an SME’s financial performance, its access to finance and its legal form play a significant positive role in its decision to apply for debt financing. Private limited SMEs that perform well and are able to access to various financing options are more likely to apply for financing. However, there is also evidence of a significant negative influence of credit history on the decision to apply for financing, as SMEs with a poor credit history are more likely to apply for financing. The age of an SME has weak influence while its size is found to be insignificant in influencing its decision to apply for financing.

The results imply the role of financial market imperfections such as adverse selection and information asymmetry in defining the SME’s demand for debt financing. The study contributes to a deeper understanding of the debt financing decisions of SMEs.

This study examines the role of financial service providers (FSPs) in assessing the supply chain credit of small and medium-sized enterprises (SMEs) and how they help SMEs obtain supply chain finance (SCF) through an established digital platform using big data analytics (BDA).

This study conducted data mining analysis on the archival data of China's FSPs in the mobile production industry from 2015 to 2018, using neural networks in the first stage and multiple regression in the second stage.

The findings suggest that digital platforms sponsored by FSPs have a discriminative effect based on implicit BDA on identifying the quality and potential risks of borrowers. The results also show that tailored information utilised by FSPs has a supportive effect based on explicit BDA in helping SMEs obtain financing.

This study contributes to the emergent research on BDA in supply chain management by extending the contextual research on information signalling and platform theory in SCF. Furthermore, it examines the distinctive financing decision models of FSPs and provides a solution that addresses the information deficiency and overload of both lenders and borrowers and plays a certain reference role in alleviating the financing problems of SMEs.

This exploratory study aims to investigate the financing issues faced by Indian small and medium enterprise (SME) owners. It also classifies the financing constraints into four financing gaps, namely, demand, knowledge, supply and benevolence.

The study uses the convergent interviewing technique to highlight the key issues being faced by SME owners in financing. Forty-four owners from different industries and having dispersed demographics have been interviewed in the study.

The findings reveal the real-time issues being faced by SME owners. SMEs faced both demand- and supply-side constraints. The most common financing challenges are high cost of credit, complex procedures of lending institutions, information asymmetry, creditworthiness and self-abstaining from external financial resources. Issues pertaining to lack of knowledge and awareness about the financial products and services are also being noticed by the researchers.

This study identifies the major financing concerns of SMEs and thereby provides a directional approach to the policymakers in the area of SME financing.

The study offers a better and data-based understanding of financing issues being faced by the SME owners. The usage of convergent interviewing allows the researchers to highlight the common issues raised by the SME owners.

Faced with the financing problem of small-medium enterprises (SMEs), China has attempted to establish as many as third party's collateral institutions. The paper aims to study the design of collateral arrangements including collateral fee rates, risk sharing, collateral capital requirements, types of collateral institutions and recollateral institution, etc.

The paper extends the model of Holmstrom and Tirole to develop the analytic framework of the theory of financing collateral. From the perspective of contract design, the paper establishes a moral hazard model focusing on the minimum capital requirement of the borrower under the condition of risk neutral and limited liability, while considering the structure of lender-collateral institution-borrower.

According to the research, only under certain conditions can third party's collateral arrangements tackle the financing problems of SMEs. Diversification, anti-collateral and linked-transactions are three means to improve financing conditions, but the most important way is efficient monitoring by collateral institutions, especially when it has relative advantage over the lender. In order to improve financing conditions of SMEs, China should rely more on efficient monitoring by banks not on excess development of collateral institutions, meanwhile relax rigid collateral supervision policies. Collateral institutions should be industry-specific, association or transaction-related type.

First, from the perspective of contract design, the paper analyzes the comprehensive institutional arrangements of third party's collateral considering mutual relationships of component elements and develops the analytic framework of the theory of third party's collateral, especially points out necessary conditions of its efficient arrangements. Second, the paper studies various efficient financing mechanisms under the institutional arrangements of third party's collateral and focusing on the role of monitoring and monitors, and the paper also has important policy implications, i.e. the paper should develop specific collateral institutions and promote monitoring role of credit institutions.

The purpose of this paper is to propose policy suggestions for the financing of small and medium enterprises (SMEs) in the Asia-Pacific region. Recent literature suggests that lack of capital is the most severe constraint for SME survival and growth. Enabling policymakers to assist SMEs in their search for financing will boost economic growth.

The methodology includes both quantitative and qualitative components. Current World Bank data on the strength of various financial institutions in the countries of interest is analyzed to discover areas of improvement. Additionally, 32 experts from East and South Asia were interviewed several times to determine areas of concern in financing SMEs. Their responses and the evidence from the World Bank data form the basis of the policy prescriptions in the paper.

Financing is a critical constraint for SMEs for several reasons. Many SME owners do not manage working capital effectively, information asymmetry between banks and SMEs retards the loan application and approval process, and underdeveloped equity markets deny SMEs future growth opportunities. Policymakers can ameliorate conditions by serving as facilitators and communicators; governments should not provide financing directly if possible.

It is hoped and expected that the policy prescriptions offered herein will enhance the growth and survival prospects of SMES, thereby creating more employment, innovation, and economic growth.

The main contribution of this work is its scope. While the financing of SMEs is a familiar topic, the review of issues and policies in East and South Asia, and their distillation into practical advice for officialdom, is what makes this manuscript unique.

The purpose of this paper is to explore the important role of supply chain risk management (SCRM) capabilities as pre-factors for SMEs to improve supply chain financing performance (SCFP), also incorporating the effect of supply chain integration (SCI).

From the intersection of SCRM and SCF literature, this paper proposed hypothesis to discuss the impact of SCRM capabilities on SCFP and the role of SCI, aiming at combine SCRM with supply chain financing management. The research model was validated applying structural equation modeling on survey data from 286 Chinese small and medium-sized enterprises (SMEs).

Four dimensions of SCRM capabilities have significant positive effects on SCFP with different significant levels, confirming that they are important pre-factors in supply chain finance (SCF). In addition, the impact of SCRM capabilities on SCFP differ when SCI varies, indicating the promoting effect of SCI.

SMEs should establish SCRM capabilities as supply chain risks greatly influence the evaluation of financial providers and the achievement of SCF. Meanwhile, SCI should be attached for it enables superior SCFP even if SCRM capabilities are relatively limited.

This study represents a pioneering attempt to analyze the pre-factors of SMEs in improving SCFP by combing SCRM with SCF management. Few prior studies have highlighted the importance of SCRM in SCF.

The purpose of this paper is to examine the effect of small and medium enterprises (SMEs)’ supply chain network on influencing credit quality, or more specifically, whether bridging tie (structural network) or strong tie (relational network) of SMEs in the supply chain can improve the availability of equity and debt capital through information sharing.

A survey was conducted in manufacturing industry in China and 208 valid questionnaires were used to test all the hypotheses. The data were then analyzed by employing partial least squares path modeling.

The results suggest that both strong tie and bridging tie of SMEs can lead to a positive effect on information sharing in supply chain, which can further enhance the credit quality for SMEs. However, without information sharing, the strong tie has not significant influence on SMEs’ credit quality, while bridging tie can directly impact on credit quality.

Despite their crucial role in sustaining national economies, SMEs are beset by the critical constraint of risk-free financing. Based on a survey, this research finds that the credit quality of SMEs is affected by two important factors: one concerns information sharing in supply chain and the other relates to the attributes of SMEs’ supply chain network. This study implies that a SME may have a financing advantage for better embedding in the supply chain network, but different effects will be experienced according to constraints associated with information asymmetry in the supply chain.

The management of liquidity has always been seen as a critical but often ignored issue in finance. Despite the abundance of studies on liquidity management, these studies mainly focus on developed countries and on large firms. Liquidity is critical for the small firm but studies on liquidity management in small and medium enterprises (SMEs) are lacking. The purpose of this paper is to examine the firm-level determinants of liquidity of SMEs in Malaysia.

Data are collected for a total of 986 small firms in Malaysia from 2011 to 2014, resulting in a total of 2,683 observations. Firm-specific variables and the effect of the economy are considered as the possible determinants of liquidity. Ordinary least squares (OLS) regression analysis with standard errors adjusted for firm-level clustering and quantile regression analysis are used for this purpose.

Analysis using OLS regression technique indicates that a firm’s profitability, its growth, asset tangibility, size, age and firm status are significant factors in influencing its liquidity decision. Leverage and economic condition are not found to have any significant influence on liquidity. However, quantile regression analysis provides a different picture especially for SMEs with liquidity at the quantile levels of θ=0.10 and 0.90. At θ=0.10, only profitability, tangibility and firm status are significant, while at θ=0.90, tangibility, size, firm status and, to some extent, age are significant in influencing liquidity levels.

To the author’s knowledge, this is the first study analyzing the liquidity decision of SMEs in an emerging market such as Malaysia. Most studies on liquidity management of SMEs are focused on developed countries due to data availability but these studies are also only a handful. Additionally, this study uses quantile regression analysis which highlights the need to analyze financial decisions at different levels rather than at the aggregate level as done in OLS regression analysis.

This study investigates the influence of inter-firm linkages between small and medium enterprises (SMEs) and large firms on the relationship between an SME's creditworthiness and its access to finance.

Survey questionnaire was distributed to 456 SMEs in the manufacturing sector in the Selangor and Federal Territory of Kuala Lumpur regions and a total of 145 useable responses were gathered. Investigation into the possible differences in the effect of creditworthiness – and its dimensions – on access to finance for SMEs with and without linkages are examined using Partial Least Squares-Multi Group Analysis (PLS-MGA).

It is found that the relationship between creditworthiness and access to finance is significant for both SMEs with and without links to large firms. However, no significant difference is found in the effect of creditworthiness on access to finance for both types of SME. Further analysis on the five different dimensions of creditworthiness shows statistically significant differences between SMEs with links and those without for the dimensions of collateral and condition. This implies that alliances formed between SMEs and large firms do not have much of an influence on the overall creditworthiness but do influence the collateral and condition of the SME.

This study contributes to the understanding of the effects of interfirm linkages on SME creditworthiness and access to finance. To the authors' knowledge no such study has been conducted on links between SMEs and large firms, especially in a developing country such as Malaysia.

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.