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This study aims to formulate a behavioural credit scoring models for Indian small and medium enterprises (SME) entrepreneurs using certain behavioural and psychological constructs. Two separate models are built which can predict the credit default and wilful default of the borrowers, respectively. This research was undertaken to understand whether certain psychological and behavioural factors can significantly predict the borrowers’ credit and wilful default.

A questionnaire survey was undertaken by SME entrepreneurs of two Indian states, i.e. Uttar Pradesh and Maharashtra. The questionnaire had two dependent variables: wilful default and credit default and nine independent variables. The questionnaire reliability and validity were ensured through confirmatory factor analysis (CFA) and further a model was built using logistic regression.

The results of this study have shown that certain behavioural and psychological traits of the borrowers can significantly predict borrowers’ default. These variables can be used to predict the overall creditworthiness of SME borrowers.

The findings of this research indicate that using behavioural and psychological constructs, lending institutions can easily evaluate the credit worthiness of those borrowers, who do not have any financial and credit history. This will enhance the capability of financial institutions to evaluate opaque SME borrowers.

There are very few numbers of studies which have considered predicting the credit default using certain psychological variables, but with respect to Asian market, and especially India, there does not exist a single significant study which has tried to fulfil such research gap. Also, this is the first study that has explored whether certain psychological factors can predict the wilful default of the borrowers. This is one of the most significant contributions of this research.

The purpose of the study is to identify certain behavioural and psychological traits of the borrowers which have the tendency to predict the credit risk of the borrowers. And the second objective is to draw a conceptual model that reveals the impact of those traits on credit default.

The study has adopted a systematic Literature Review approach to identify those behavioural and psychological traits of borrowers that reflect on the tendency to predict the credit default of borrowers.

The findings of this study have revealed that there are some non-financial factors, which can be looked into while granting a loan to a borrower. The identified factors can be used to develop a subjective credit scoring model that can quantify and verify the soft information (character and reliability) of debtors. Further, a behavioural credit scoring model will help in easing the assessment of those borrowers, who do not have an appropriate credit history and reliable financial statements.

The proposed model would help banks and financial institutions to evaluate those borrowers who lack substantial financial information. Further, a subjective credit scoring model would help to evaluate the credit worthiness of such borrowers who do not have any credit history. The model would also reduce the biasness of subjective scoring and would reduce the financial constraints of borrowers.

By reviewing the literature, it has been observed that there are very few studies that have exclusively considered the behavioural and psychological factors in credit scoring. Several studies have linked the psychological constructs with debts, but very few researchers have considered it while constructing a behavioural scoring model. Thus, it can be inferred that this area of behavioural finance is still unexplored and needs attention of researchers worldwide. In addition, most of the studies are carried out in European, African and American regions but are almost non-existent in the Asian markets.

Small and medium enterprises (SMEs) commonly struggle to acquire needed financial, human, and technological resources. The above being stated, recent scholarly research argues that SMEs that are able to successfully navigate the legitimacy threshold are better able to gather the resources they need to survive and grow. This article provides an empirical test of that claim by examining whether the presence of a corporate parent positively influences SME resource acquisition. Results of the study show that SMEs with corporate parents, when compared to like-sized independent SMEs, have higher credit scores, have more complete management teams, use more computers, and are more likely to be on the Internet. These differences are most pronounced for very small firms and diminish in significance as firm size increases. Study implications include the notion that presence of a corporate parent likely represents a successful navigation of the legitimacy threshold, positively increasing SME resource acquisition.

The purpose of this paper is to test and extend a conceptual model of risk assessment in bank lending to SMEs using five German and five UK bank case studies. Derived from research in Germany and the UK, the model postulates that factors in the external, operating and internal environments of individual banks can influence credit-risk assessment decisions.

The empirical data for this paper was collected during face-to-face interviews with five UK lending bankers in June 2006 and five German bankers in February 2007. The timing is important, as these were unaffected by credit-crunch considerations. The sample banks were similar in size and operating in the retail environment in their respective countries. The interviewees comprised lending officers and managers in loan departments. All interviews were conducted using a questionnaire format designed to elicit a commentary on the loan process in a reasonably unstructured way.

Notable differences emerged from these findings compared to the scene painted by existing research. The findings argue that changes in the law and banking regulations have reshaped both German and UK banking institutions. German bank employees are facing ever-increasing pressure as their employers strive to become efficient, streamlined banks with a high orientation towards their shareholders in a highly competitive market. This has a consequence for the emphasis placed on local and community factors. These findings further argue that German banks have moved their value orientations towards the British banking model to simulate the high returns achieved by British banks. German banking culture and state values are deeply embedded into the societal structure (Llewellyn, 2002; Lane and Quack, 2001). The deregulation of German banks has manifested in an adjustment of institutional behaviour, steering towards a shareholder orientation. However, even whilst German banks readjust their strategies, they continue to struggle to “shake off” their original roots and a cultural identity of stakeholder orientation.

This study provides a historical context for the recent developments in public sector reporting and accountability in the financial banking sector in both the United Kingdom and Germany. The paper provided an insight into the determination and interpretation of European regulations.

The review examines the existing literature on blockchain-based small and medium enterprise (SME) finance and highlights its trend, themes, opportunities and challenges. Based on these factors, the authors create a framework for the existing literature on blockchain-based SME financing and lay down future research paths.

The review follows a systematic approach. It includes 53 articles encompassing multiple dimensions of blockchain-based SME finance, including peer-to-peer lending platforms, supply chain finance (SCF), decentralized lending protocols and tokenization of assets. The review critically evaluates these approaches' theoretical underpinnings, empirical evidence and practical implementations.

The review demonstrates that blockchain-based SME finance holds significant promise in addressing the credit gap by leveraging blockchain technology's decentralized and transparent nature. Benefits identified include reduced information asymmetry, improved access to financing, enhanced credit assessment processes and increased financial inclusion. However, the literature acknowledges several challenges and limitations, such as regulatory uncertainties, scalability issues, operational complexities and potential security risks.

The article contributes to the growing knowledge of blockchain-based SME finance by synthesizing and evaluating the existing literature. It also provides a framework for the existing literature in the area and future research paths. The study offers insights for researchers, policymakers and practitioners seeking to understand the potential of blockchain technology in filling the SME credit gap and fostering economic development through improved access to finance for SMEs.

This study aims to explore credit scoring regulations, governance, variables and methods used by peer-to-peer (P2P) lending platforms in key players of the Association of Southeast Asian Nations (ASEAN) region’s P2P, Indonesia, Malaysia and Singapore.

This study explores the P2P Lending characteristics of the three countries using qualitative literature review, interview, focus group discussion and desk research.

This study concludes that the credit scoring variables used by the countries’ companies are almost the same. Key drivers of the differences are countries’ regulations, management/business core value and credit scoring data processing methods.

Ultimately, this research provides a comprehensive view for investors, businesses and researchers on the topic of ASEAN credit scoring governance and will help them navigate the complexities and improve their awareness on the importance of credit scoring governance in P2P lending companies.

This research provides an in-depth perspective on how P2P lending companies, credit scoring governance and regulations in the biggest three countries in Southeast Asia.

The purpose of this study is to highlight the key challenges and opportunities that lie with some of the alternative avenues/tools to promote financial access to MSME in India.

Initially, the study discusses the scope of various alternative avenues/tools for MSME financing along with traditional bank SME credits, highlighting some of the factors that will boost the high performance and growth of MSME in future.

There is a dominance of domestic banks in the MSME financing over cross-border banks in India. The study finds several opportunities lie in the MSME financing for the banks and other alternative avenues/tools: friendly government policies and improving the legal system make the business environment suitable for MSME financing business. There are several obstacles like discrete presence of clients, high operating cost and low profitability, lack of proper risk management and low literacy rate that make MSME financing difficult for the SME finance business. Active government initiatives and other supporting factors will act as the game changer and promoter for the banks and other alternative avenues/tools for MSME financing.

The paper is original and brings out some valuable findings that will help the SME business clients to choose alternative access to finance.

The purpose of the study is to examine the use of alternative information in bank lending to small and medium enterprises (SMEs). Understanding alternative information and its use in bank lending to SMEs is important because it has become a growing part of the future of SME finance. The results and findings of my study not only enrich the finance literature but, more importantly, also address the use of Fintech in the risk management of SME lending, a new and complex problem that is specific to both the information technology and finance field.

To answer the research question, the author used a case study approach that relies upon qualitative data and analysis. By iterating between the existing literature, theoretical pieces and empirical findings, the author explain and interpret in detail how the use of alternative information impacts loan outcomes and develop insights to guide future research.

The case is outlined in two time periods including the prepartnership period and the postpartnership period. It highlights the establishment of a partnership between LoanBank and FintechInc (pseudonym), aimed at SME-focused Fintech lending. The findings underscore how the partnership has enabled a mutually beneficial situation where LoanBank and FintechInc leverage each other’s strengths to provide efficient and effective lending services. The adoption of alternative information in the risk management Fintech (RMF) platform of FintechInc has transformed LoanBank’s lending processes, showcasing how technological innovations can enhance SME lending practices.

The study’s originality mainly lies in the three detailed insights regarding alternative information’s impact on SME lending: information, platform properties and financial inclusion. The information part demonstrates that RMF platforms expand the information used for lending decisions, shifting from traditional hard and soft data to incorporating various alternative information sources. The platform properties part suggests that location, openness and technology also play a pivotal role in shaping lending outcomes. Finally, the financial inclusion part proposes that the use of alternative information has the potential to improve financial inclusion and offer better credit terms to previously underserved borrowers.

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.