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The purpose of this paper is to examine how a supply chain (SC) network helps small and medium enterprises (SMEs) to obtain liquidity and working capital for enhancing their performance while developing the relationships among SC members through information sharing. Moreover, this study also investigates whether a strong tie or bridge tie improves the availability of SMEs’ credit and performance.

Using a survey approach, data were collected from textile SMEs, located in Pakistan. Structural equation modeling and hierarchical regression model were run to validate the proposed model and the relationships.

Findings highlighted that strong tie and bridge tie of SMEs positively and significantly enhance the credit quality and SMEs’ performance. Furthermore, information sharing significantly moderates the relationship between SC network ties and SMEs’ credit quality. Credit quality significantly explains the indirect (mediation) association between the strong tie and the firm performance.

This study will help the SMEs’ entrepreneurs and SC executives to strengthen the liquidity position of SME and improve SMEs’ performance by developing the bridge ties. SMEs should share more information in their SC network while performing business transactions so that financers or lenders can easily access their operational capabilities and individual characteristics to offer them quality credit such as supply chain finance (SCF).

SMEs always face the issue of risk-free financing which adversely affects the firm performance. This study covered the hidden gap in SCM and SMEs’ financing literature by identifying the crucial role of SCF as quality credit in the development of SMEs. Moreover, SMEs can get benefits (e.g. quality credit=SCF) for better embedding in an SC network through information sharing.

The credit of agricultural product quality and safety reflects the ability of the main actors involved in the supply chain to provide reliable agricultural products to consumers. To fundamentally solve the problem of agricultural product quality and safety, it is worth studying how to make the credit awareness and integrity self-discipline of the supply chain agriculture-related subjects strengthened and the role and value of credit supervision given full play. Starting from the application of blockchain in the agricultural product supply chain, this paper aims to investigate the main factors affecting the credit regulation of agricultural product quality.

Using the DEMATEL-ISM (decision-making trial and evaluation laboratory–interpretative structural modeling) method, we analyze the credit influencing factors of agricultural quality and safety empowered by blockchain technology, find the causal relationship between the crucial influencing factors and deeply explore the hierarchical transmission relationship between the influencing factors. Then, the path analysis in structural equation modeling is utilized to verify and measure the significance and effect value of the transmission relationship among the crucial influencing factors of credit regulation.

The results show that the quality and safety credit regulation of agricultural products is influenced by a combination of direct and deep influencing factors. Long-term stable cooperative relationship, Quality and safety credit evaluation, Supply chain risk control ability, Quality and safety testing, Constraints of the smart contract are the main influence path of blockchain embedded in agricultural product supply chain quality and safety credit supervision.

Credit supervision is an important means to improve the ability and level of social governance and standardize the market order. From the perspective of blockchain embedded in the agricultural supply chain, the regulatory body is transformed from the product body to the supply chain body. Take the credit supervision of supply chain subjects as the basis of agricultural product quality supervision. With the help of blockchain technology to improve the effectiveness of agricultural product quality and safety credit supervision, credit supervision is used to constrain and incentivize the behavior of agricultural subjects.

The purpose of this study is to examine whether the required disclosure and the high frequency of key audit matters (KAMs) are likely to moderate the effect of higher credit risk on earnings quality.

This study uses 15,106 Taiwanese firm-year observations to explore the relationship between earnings quality and credit risk during the 2011 to 2020 period. We use the two-stage least squares method to test whether the presence of KAM disclosures moderated the association between earnings quality and credit risk and also to examine whether higher KAM frequency moderates the association between earnings quality and credit risk.

Our results provide evidence that the presence of a KAM disclosure requirement moderates the impact of firms with higher credit risk on earnings quality. In addition, there is significant evidence that the higher the frequency of KAM disclosures the greater the moderation impact that is found.

This research investigates whether the disclosure and high frequency of KAMs moderates the effect of credit riskiness on earnings quality. This study improves our understanding of whether more KAMs disclosures would improve earnings quality of firms with higher credit risk. In addition, we also use Beneish M-SCORE, as an alternative earnings quality proxy, to reinforce our empirical results. This markedly differentiates this paper from other studies.

This study mainly aims to explore the impact of management practices and managerial behavioral attributes on credit rating quality in Tehran Stock Exchange.

In this study, 214 firms were assessed from 2014 to 2020. The credit rating quality was measured through Technique for Order of Preference by Similarity to Ideal Solution and the entropy weighting method. In accordance with the theoretical literature, managerial entrenchment, managerial myopia, managerial overconfidence and managerial narcissism were considered as the managerial attributes. Furthermore, to examine management practices, cash flow management and accrual management were explored.

The results of this study showed that the cash flow from operations management and the accrual management has a significant positive effect on the credit rating quality. The managerial entrenchment, managerial narcissism and managerial myopia have significant negative effects on credit rating quality, while the effect of managerial overconfidence on credit rating quality is not significant.

Understanding the factors that affect the credit rating quality is of a great importance. Considering the significance of cash management in the present era and the impact of managerial psychological and behavioral characteristics in the development of the organization, empirical results of this study can help investors, capital market regulators and other stakeholders to strengthen the firm and better decisions.

The purpose of this paper is to investigate whether the quality of the credit process is sensitive to reaching a particular threshold level of non-performing loans (NPLs) and, more importantly, whether higher NPLs ratios could make the monitoring activity ineffective.

The empirical design is composed of two steps: in the first step, the authors introduce a monitoring performance indicator (MPI) of the credit process by combining the non-parametric technique Data Envelopment Analysis with some financial ratios adopted as input and output variables. As second step, the authors apply a threshold panel regression model to a sample of 298 Italian banks, over the time period 2006–2014, and the authors investigate whether the quality of the credit process is sensitive to reaching a particular threshold level of NPLs.

This paper finds that, first, when the NPLs ratio remains below the threshold value estimated endogenously, an increase in the quality of monitoring has a positive impact on the NPLs ratio. Second, if the NPLs ratio exceeds the estimated threshold, the relationship between the NPLs ratio and quality of monitoring assumes a positive value and is statistically significant.

Due to the lack of data, the investigation of NPLs in the Italian industry across loan types combined with the monitoring effort by banks management was not possible. The authors plan to investigate this topic in future studies.

The identification of the threshold has a double operational valence. The first regards the Supervisory Authority, the threshold approach could be used as an early warning in order to introduce active control strategies based on the additional information requested or by on-site inspections. The second implication is highlighted in relation to the individual banks, the monitoring of credit control quality, if objective and comparable, could facilitate the emergence of best practices among banks.

A high NPLs ratio requires greater loan provisions, which reduces capital resources available for lending, and dents bank profitability. Moreover, structural weaknesses on banks’ balance sheets still persist particularly in relation to the inadequate internal governance structures. This means that bank management must able to recognise in advance early warning signals by providing prudent measurement together with an in-depth valuation of loans portfolio.

The originality of the paper is twofold: the authors introduce a new proxy of credit monitoring, called MPI; the authors provide an empirical proof of the Diamond’s (1991) economic intuition: for riskier borrowers, the monitoring activity is an inappropriate instrument depending on the bad reputational quality of borrowers.

This paper aims to investigate the relation between the creditworthiness of US institutions of higher education and their student selectivity (i.e. demand and quality).

The authors study whether the impact of student selectivity differs across public vs private universities; across the credit quality of the given public university’s state; and across the level of state appropriations for the given public university.

The authors find that student quality and demand measures are significantly associated with their corresponding institution’s creditworthiness, especially for private universities.

For public universities the association is weak and, contrary to the expectations, does not depend on the state credit quality or level of state funding. The findings are robust to the inclusion of control variables.

Asset sales can have opposing effects on firm credit quality. On the one hand asset sales could signal increased credit risk resulting from distress or on the other hand they could improve internal liquidity and hence credit quality. Therefore the impact potential asset sales can have on credit quality is an empirical question and one that has previously not been examined in the literature. The paper aims to discuss these issues.

Using credit ratings as a measure of firm credit quality, in ordered probit regressions, this study finds evidence consistent with the internal liquidity view of the asset sales-credit risk relationship.

Results from ordered probit regressions of credit ratings show that the likelihood of higher credit ratings is increasing in industry-level turnover of real assets

Credit-rating agencies often cite the impact of asset sales on firm credit quality as a motivation for their rating assignments. Distress-driven asset sales could reduce firm credit quality whereas other asset sales could result in increased internal firm liquidity and hence improve firm credit quality. This bi-directional expectation leaves the question of how asset sales affect credit quality to be answered empirically and has not been previously tested in the literature.

The purpose of this paper is to understand how knowledge spillover and access in a supply chain network enhance the credit quality in supply chain finance (SCF) of small and medium enterprises (SMEs).

Drawing on network theory and a knowledge-based view (KBV) of SCF, this paper proposes a theoretical model and tests it using survey data from a sample of 248 SMEs in China.

The main finding is that both strong ties and dense ties within a supply chain network have positive effects on SMEs’ credit quality, and these effects are mediated by knowledge spillover and knowledge access. Interestingly, knowledge spillover is found to have a positive effect on knowledge access.

This paper is the first to investigate the relationship between supply chain network and supply chain financing from a KBV. The proposed model captures the complexity in the interaction among different attributes of supply chain networks (i.e. strong ties and dense ties), different aspects of knowledge transfer (i.e. knowledge spillover and knowledge access) and SMEs’ credit quality in SCF. The results not only show the importance of SMEs’ supply chain networks to SMEs’ credit quality but also contribute to the understanding of the KBV in SCF.

Banking sectors in central, eastern and southeastern European (CESEE) countries have gone through a transformation from state-ownership and central planning to private ownership and market-oriented decision making during the first decade of the 21st century. However, financial markets in these countries are still developing and the private sector is highly exposed to changes in exchange rates, especially in terms of the balance sheet channel. The fact that these banking sectors are predominantly owned by eurozone banks makes them vulnerable to macroeconomic tensions in the European union. This analysis investigates macroeconomic determinants of the realisation of credit risk in the loan portfolio of banks in Serbia using a panel data set covering the period from 2008Q3 to 2012Q2. Three different panel methods were applied separately for loans to households and loans to enterprises. The results indicate that a deteriorating business cycle and exchange rate depreciation led to the worsening of the quality of banks’ loan portfolio in Serbia in the period under review. In addition, statistical evidence indicates that the CPI inflation additionally affected the quality of loans. Furthermore, we find that household loan portfolios are also sensitive to changes in the short-run interest rates. As for policy implications, the importance of international cooperation between regulators is rising. A very important topic for such cooperation should be the risk-taking channel between countries with significant differences in interest rates and degree of riskiness. The interrelationship between the exchange rate and credit risk should be a major focus of both domestic macro- and micro-prudential policy – banks should be motivated to pay more attention to the possible negative spillovers when making credit decisions. Also, further development of the domestic primary and secondary T-bills market would help reducing unhedged FX risks.

This paper aims to offer an empirical study of the impact of institutional quality on the banking system risk and credit risk.

Applying cross-sectional dependent tests and stationary tests to check the property of our sample, the panel corrected standard errors model is recruited as the main estimator, while feasible generalized least squares, pool ordinary least squares (OLS), robust pool OLS and other estimators are used as a robustness check for an unbalanced panel data for 56 economies divided into three subsamples between 2002 and 2015.

The empirical results show several significant contributions. First, an improvement in institutional quality is an important factor to reduce the banking system risk. This effect of the institutions is less important in well-capitalized, highly profitable and in high-economic growth countries. This effect is also stronger in highly liquid banking systems. Notably, a better institutional quality helps to reduce the banking system risk in the highly concentrated banking system. Second, institutional quality has a significant negative relationship with the banking credit risk, especially in highly concentrated banking systems and in high-growth countries. This influence is weaker in highly liquid and well-capitalized banking systems. Finally, better institutions reduce the positive effect of trade openness, but it induces a higher credit risk for the banking system from the trade openness. Notably, a better institutional quality enhances the negative effect of foreign direct investment (FDI) inflow on both banking system risk and credit risk. These findings are documented for a global sample and three subsamples: low and lower-middle-income economies, upper-middle-income economies and high-income economies.

This study provides some recommendations, for policymakers, on the roles of institutions in the banking system and financial stability.