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The purpose of this paper is to investigate the trend of discouragement in the small and medium sized enterprise’s (SME) lending market during the aftermath of the financial crisis of 2008. It detects the extent to which the responses of discouraged firms to improvements in the lending market are lagged.

The results are based on surveys of UK SME Finance Monitor (2011-2016). Probit regression models were used to assess the effect of time passed from the financial crisis on the probability of discouragement.

The analysis, inter alia, shows that the rate of discouragement has reduced significantly since 2013. The results highlight the long-term effect of tightened credit supply on SMEs that are ready to invest, but hold back because of fear of rejection.

The research suggests addressing imperfect information among discouraged SMEs that are recuperating from the financial crisis. With the rise of information asymmetry, entrepreneurs show a higher level of fear of rejection by financial institutions. The longer the effects of the financial crisis exists among entrepreneurs, the longer they self-ration from credit market, which subsequently leads to reduced levels of investment, growth, and innovation among SMEs.

This research fills a gap in the literature of the effect of financial crisis on the latent demand for lending. It discusses the long-term effect of tightened credit supply among entrepreneurs even though the supply side has recuperated and recommenced pre-crisis activities.

This paper aims to evaluate whether small marginal farmers in India have financial constraints and to examine how bank managers make lending decisions.

A survey approach was employed, using semi-structured questionnaires with a sample of 42 banks and 185 farmers from the state of Punjab in India. The questionnaires and semi-structured interviews were carried out on a one-to-one basis and in focus groups, and their responses were analysed from the supply (banks) and demand (farmers) side regarding access to finance.

The results indicate that the Indian farming sector is a complex and multidimensional one that has dependency on both the private and public sectors because of its national importance to varying degrees. Financial lending decisions are dependent upon several non-quantifiable factors (culture, caste, family size, education) and relational bank lending practices. Such practices have an adverse impact on bankable loan applications, and this gives rise to moral hazards. Relational banking and recommendations minimise default rates, but this does not minimise information asymmetry. Subjectivity in decision-making persists, which is compounded by underdeveloped financial markets for small farmers, giving rise to financial exclusion and negatively impacting on economic growth. To overcome information asymmetry, banks rely on the qualitative factors and an excessive level of collateral when making lending decisions. The findings provide valuable insight into how banks make lending decisions and evaluates a complex matrix of relationships between farmers and providers of debt finance in a developing economy such as India.

Policy makers nationally and internationally could use the results of this research to develop relevant and targeted policies to promote the agricultural sector through adopting efficient provision of finance for farmers. A major contribution of this research is to provide a fundamental evaluation of the issues facing farmers in accessing finance in developing countries.

This study provides an original empirical insight into a sector of the economy that has implications for food security for a country. The study has relevance for a wide range of stakeholders and policy makers of both developed and emerging economies in the world.

The purpose of this paper is to apply a capability perspective to investigate the shift from relationship lending to transaction lending in a bank’s corporate segment. The authors investigate the impact of three operational capabilities: assisting corporate clients in funding and business operations, management of customer relationships and internal cooperation on performance in relationship and transaction lending.

The primarily empirical material comprises longitudinal survey data, collected on three occasions during the period 1998 throughout 2001 from one of Sweden’s largest banks. Data are analyzed using factor analysis and OLS regression.

Results show that the effects of the three capabilities are contingent on the type of lending strategy: In relationship lending, assisting corporate clients has no significant direct effect on performance; however, it has an indirect effect on performance via the management of customer relationships. In transaction lending, assisting corporate clients has a direct effect on performance, and this effect becomes stronger as the transaction strategy is further implemented. The results also show that the direct effect of the management of customer relationships and cooperation on performance is significant in both strategies; however, the relation is stronger in relationship lending compared with transaction lending.

The findings indicate that the choice of lending strategy is more complex than a choice between a strict relationship strategy and a strict transaction strategy and that a strategy that leads to competitive advantage includes elements of both strategies.

This paper examines the Competition Commission report on the provision of small and medium‐sized enterprise (SME) banking services in the UK. The examination will centre on the perceived clash between the ‘remedies’ proposed by the Competition Commission and the present forms of lending decision making, a key function in business banking. It is concluded that the Competition Commission assessment of the provision of banking services by clearing banks to small firms, directs scant attention as to how banking services are ‘manufactured’ or banks actually make decisions and operate in practice.

Pledging collateral to secure loans is a prominent feature in financing contracts around the world. Existing theories disagree on why borrowers pledge collateral. It is even more challenging to understand why in some countries collateral coverage exceeds, for example, 300% of the value of a loan. This study looks at the association between collateral coverage and country-level governance and various institutional proxies. It investigates the economic implications of steep collateral coverage and sketches policy options to lower ex-ante asymmetric information and ex-post agency problems. Within this framework, should a lender collect the debt forcibly on default and liquidated assets fetch prices below outstanding loan values, the lender’s loss is covered through credit insurance, which would significantly reduce the need for steep collateral coverage. This proposal may increase level of private credit, investment and growth; particularly, in a number of developing countries where collateral spread is the main inhibitor of finance.

This study seeks to examine the relationship between individual's cultural values of individualism, collectivism, selected personality traits and the psychological contracts they tend to form.

Surveys were used to collect data from China and US sample sets. Multiple regression analyses were conducted to explore the impact of selected cultural values and personality traits on individuals' tendency to form transactional contract or relational contract.

Personality characteristics of equity sensitivity and external locus of control were found to be positively related to transactional contract type for both samples, and conscientiousness was found to be positively related to relational contract, but the relationship was only found for the Chinese sample. The impact of the individualistic cultural value on the type of psychological contract one forms with the employer is uncertain, but the individualism value was found to have a mediator effect between age and transactional contract type for the Chinese sample.

The study contributes evidence that can help explain why employees who face the same job conditions and employment relationships may develop different psychological contracts with their employers. The finding on the mediating effect of individualism between age and transactional contract highlight challenges faced by managers in China's changing economy in terms of motivating and retaining young employees.

The study contributes to research on personality and psychological contracts. In the domain of personality, the study attempts to explore how personality affects organizational behavior. From the perspective of psychological contract, the paper contributes evidence that can help explain why employees who face the same job conditions and employment relationships may develop different psychological contracts with their employers.

The purpose of this paper is to explore how entrepreneurs, banks, the government, and alternative lending respond to finance gaps for small and medium enterprises (SMEs). This paper considers valuation as a sociological construct where actors use different calculative devices, forming an assemblage that partly positions valuation of entrepreneurial finance as a contested and socially constructed process.

Drawing on the concept of “calculative devices”, the study articulates discursive institutional practices embedded within SME lending. This case study draws on analyses of 30 semi-structured interviews and archival data, government reports, and newspaper articles.

The study identified three triggers in Rwanda that were rooted in the informal and unincorporated nature of the SME governance structure, the lack of capacity for SME owners to manage their own projects, and normalising language around collateral requirements that marginalised the realities of SMEs, contributing to stagnation for SME finance.

The research provides direction for understanding how calculative devices create new forms of valuation of entrepreneurship in developing countries, particularly when human and non-human actors come together in an assemblage. The study calls for further research to demonstrate the embedded power of valuation practices and the performance of value in entrepreneurial finance.

The study brings new findings to the market creation literature by extending the notion of distributive calculative agency to SME finance. The study mobilises theory to interpret how discursive institutional practices are embedded within a country’s finance infrastructure, yielding unintended consequences for SME growth.

This paper investigates the effect of entrepreneurial orientation (EO) on small- and medium-sized enterprises' (SMEs) access to credit. Starting with the idea that SMEs' strategy-making process, structures and behaviour can favour credit access, the authors also explore the moderating role of bank lending technologies in shaping this relationship.

This study relies on a unique survey of Austrian and Italian SMEs which contains detailed information on access to credit, EO dimensions, relationship lending and firm-level characteristics. The authors perform stepwise logistic regressions to assess whether EO interacts with SME's access to finance, and how relationship lending enhances this relationship.

Proactiveness, autonomy and competitive aggressiveness are important constructs for improving access to bank financing. Those dimensions became more important when a relationship bank is involved, suggesting a role for relationship lending in overcoming SMEs' opaqueness. In addition, relationship lending is crucial for innovative SMEs in overcoming credit denial rates.

The small sample did not allow to analyse the effect of EO on discouraged borrowers. Furthermore, alternative measures of relationship lending (such as geographical proximity or the length of the relationship) and the share of credit granted by the relationship bank would have been interesting to further validate our results.

This study shows that EO dimensions and the type of lending technology are relevant for the financial success of SMEs. More precisely, the authors show that diversity within the banking system helps innovative, autonomous, proactive and competitive SMEs. These important pieces of soft information are injected into the final lending decision when a relationship bank is involved. The evidence suggests the need for SMEs to interact with local banks to fully exploit their EO posture.

To the authors' knowledge, this paper is the first attempt to analyse whether relationship lending can affect the EO–credit access relation.

The purpose of this study is to develop an integrative model of credit granting to small- and medium-size enterprises (SMEs) incorporating the loan officers’ perceptual factors about SMEs (risk and trust) and accounting information (quality and usefulness). Moreover, the role of auditing on credit granting has been studied.

The structural equation modelling (SEM) approach is used to test the joint effect of explanatory variables. Empirical evidence is obtained from a questionnaire administered to 471 bank loan officers in Spain. The questions are asked for both audited and not-audited firms.

The results obtained confirm that perceived risk and trust have a significant influence on the probability that SMEs can get access to credit and obtain better financing conditions. Additionally, this research supports the relevance of presenting high-quality accounting information, as it increases information usefulness for loan officers, which improves the perceived risk and trust on SMEs and leads to better credit granting. There are no significant differences on the model between the sub-groups of audited and not-audited SMEs, although the valuations are significantly better for the former.

This study shows the need to consider subjective variables to understand properly the cognitive process underlying credit-granting decisions.

This research has relevant implications for the management of relationships between SMEs and banks.

This study contributes to the previous literature by proposing an integrative model of the variables that affect loan officers’ lending decision to SMEs, considering the influence of perceptual variables such as risk and trust, as well as the evaluation of the information available.

Within the academic marketing literature the importance of government policy and regulatory judgement receives far less scrutiny than is justified. To illustrate the importance of government regulation broadly and the new UK competition law framework specifically, a single regulatory case is examined: the Competition Commission assessment of the provision of banking services to small and medium‐sized firms. The report aims to promote more “arm's length” or transactional approaches to managing SME bank customers, effectively reducing banks' abilities to build relationships with its SME customers. It is proposed that relationship marketing for banking services to SMEs, a subject of considerable academic attention in recent years, has been severely curtailed in its present form by this recent regulatory judgement. The discussion also provides broader implications for policy analysis and marketing.