scholarly journals The value of in-person banking: evidence from U.S. small businesses

2021 ◽  
Author(s):  
Song Zhang ◽  
Liang Han ◽  
Konstantinos Kallias ◽  
Antonios Kallias
Keyword(s):  
Interest Rates ◽  
Interpersonal Communication ◽  
Rural Areas ◽  
Financial Services ◽  
Small Businesses ◽  
Business Owners ◽  
Soft Information ◽  
Face To Face ◽  
Treatment Effect Models ◽  
The U.S

AbstractWe produce the first systematic study of the determinants and implications of in-person banking. Using survey data from the U.S., we show that firms which are informationally opaque or operate in rural areas are liable to contact their primary bank in-person. This tendency extends to older, less educated, and female business owners. We find that a relationship based on face-to-face communication, on average, lasts 17.88 months longer, spans a wider range of financial services, and is more likely to be exclusive. The associated loans mature 3.37 months later and bear interest rates which are 11 basis points lower. For good quality firms, in-person communication also relates to less discouraged borrowing. These results are robust to multiple approaches for endogeneity, including recursive bivariate probits, treatment effect models, and instrumental variables regressions. Overall, our findings offer empirical grounding to soft information theory and a note of caution to banks against suppressing channels of interpersonal communication.

Geographical location: does distance matter or what is the value status of soft information?

2014 ◽  
Vol 21 (1) ◽  
pp. 87-99 ◽  
Author(s):  
Andreas Rauterkus ◽  
George Munchus
Keyword(s):  
Rural Areas ◽  
Financial Services ◽  
Small Businesses ◽  
Statistical Tests ◽  
Geographical Location ◽  
Soft Information ◽  
Content Type ◽  
Small Business Finance ◽  
Board Of Governors ◽  
The Relationship

Purpose – This study aims to examine empirically the relationship between loan denials and lender distance and location. Design/methodology/approach – This study uses the 2003 Survey of Small Business Finance (SSBF) to draw the sample. This survey, conducted by the Board of Governors of the Federal Reserve, collects information on small businesses' use of financial services. In total the survey gathered information representing 4,240 firms (all sample firms have fewer than 500 employees). A number of statistical tests are conducted to test the relationship between loan denials and lender characteristics. Findings – The results of this study indicate that credit scores have no impact on the geographical location and lender distance; however, lender distance decreases with the length of relationship with the lender and the age of the business. This suggests that informationally opaque businesses seek out lenders nearby to maximize the value of soft information, whereas established businesses put no value on that. However, the probability of loan denial is not affected by the distance between the borrower and the lender. At the same time borrowers in rural areas are more likely to be denied. Thus, there seems to be a location effect in lending. Originality/value – This study closes a gap in the literature with regard to the value of soft information in light of increasing bank consolidation. Furthermore, this paper uses borrower data, making this – to the authors' knowledge – the first study on lending distance that does not utilize lender data.

scholarly journals Does the environment matter, a closer look at the environmental approach by small businesses in Africa developing countries.

2021 ◽  
Vol 9 (9) ◽  
pp. 43-54
Author(s):  
Bobo Chazireni
Keyword(s):  
Developing Countries ◽  
Small Businesses ◽  
Business Strategy ◽  
Business Owners ◽  
Bottom Line ◽  
Face To Face ◽  
Chambers Of Commerce ◽  
Sustainability Strategy ◽  
Strategy Alignment ◽  
Mixed Approach

Environmental Social Responsibility (ESR) is a notion, where business integrates environmental concerns in their operations and the interaction with stakeholders, without compromising profit. To this day, ESR studies are limited to areas of ethics, society and employees while literature is blunt on its impact on societies, consumer behaviour and governments. SMEs in developing countries are not spared their approach to ESR as a sustainability strategy. SMEs’ approach seems to digress from leverage on loyalty which emanates from their nearness to communities who in turn are potential customers. This paper takes a closer look at SMEs’ approach to ESR driven by SME business owners’ perception towards ESR. The paper will take account of SMEs’ behavioural response towards ESR and establish whether they regard ESR a strategic sustainability approach with long-term positive bottom-line benefits. Results were attained through assessing perceptions of SMEs towards ESR; assessing impact practice of ESR by SMEs; exploring factors that undermining practise of ESR by SMEs. A mixed approach was adopted where data was obtained using face to face interviews. Results showed that the majority of SME business owners had a negative approach towards the practice of ESR. SMEs believe ESR was mainly for large corporations since their operations were hideously affecting the environment. As new knowledge, recommendations from this paper will be shared with Chambers of Commerce in Africa developing countries. Some of the recommendations were that the chambers of commerce, local authorities must proactively support SMEs to practise ESR through awareness workshops, train and share the ESR strategy alignment with business strategy.

Growth and Development of Small Business Through Microfinance Activities in Nepal

2020 ◽  
Vol 1 (1) ◽  
pp. 26-34
Author(s):  
Chandra Prasad Dhakal
Keyword(s):  
Small Business ◽  
Financial Services ◽  
Small Businesses ◽  
Growth And Development ◽  
Linear Regression Analysis ◽  
Multiple Linear Regression Analysis ◽  
Business Owners ◽  
Small Business Owners ◽  
Microfinance Institutions ◽  
Economic Activities

Small businesses play important role for economic development and stability. It develops access in financial services through enhancing economic activities. The study analyzes the growth and development of small businesses that enhance through the support of micro finance in Nepal. Descriptive and inferential were used to collected data and collected data were analyzed through using multiple linear regression analysis. Only 124 small business owners were selected for this study. The study helps to find out the growth of microfinance institutions (MFIs) and small businesses in emerging economy in Nepal. It also assists MFIs to assess the effectiveness of their services and help to efficient utilization of available resources in the economy of Nepal.

Farmers' preferences and willingness to pay for microcredit in Benin: results from in-the-field choice experiments in Benin

2020 ◽  
Vol 80 (5) ◽  
pp. 665-692 ◽  
Author(s):  
Tchekpo Fortune Ogouvide ◽  
Ygue Patrice Adegbola ◽  
Roch Cedrique Zossou ◽  
Afio Zannou ◽  
Gauthier Biaou
Keyword(s):  
Willingness To Pay ◽  
Interest Rates ◽  
Rural Areas ◽  
Financial Services ◽  
Poverty Reduction ◽  
Latent Class ◽  
Microfinance Institutions ◽  
Choice Modelling ◽  
Attribute Importance ◽  
Content Type

PurposeThis document analyses farmers' preferences and willingness to pay (CAP) for microcredit, in order to facilitate their access in rural areas.Design/methodology/approachData are based on a discrete choice experiment with 400 randomly selected farmers from 20 villages of the 7 Benin agricultural development hubs (ADHs). The preference choice modelling was performed using mixed logit (MXL) and latent class logit (LCL) models. Farmers' willingness to pay for each preferred attribute was estimated. The endogenous attribute attendance (EAA) model was also used to capture attribute non-attendance (ANA) phenomenon.FindingsThe results indicate that, on average, farmers prefer individual loans, low interest rates, in kind + cash loans, cash loans, disbursement before planting and loans with at least 10-month duration. These preferences vary according to farmers' classes. Farmers are willing to pay higher or lower interest rates depending on attribute importance. The estimate of the EAA model indicates that, when taking the ANA phenomenon into consideration, people will show stronger attitudes regarding WTP for important factors.Research limitations/implicationsBased on these results from Benin, microfinance institutions (MFIs) in developing countries can, based on the interest rates currently charged, attract more farmers as customers, reviewing the combination of the levels of the attributes associated with the nature of the loan, the type of loan (individual or collective), the disbursement period of funds, the waiting period of the loan and the loan duration. However, the study only considered production credit, ignoring equipment or investment credit.Practical implicationsThe document provides information on the key factors that can facilitate producers' access to MFI products and services.Social implicationsFacilitating small farmers' access to financial service will contribute to poverty reduction.Originality/valueThis research contributes to the knowledge of the attributes and attribute levels favoured by farmers when choosing financial products and the amounts they agree to pay for these attributes. The implementation of the results would facilitate small producers' access to financial services; thus contributing to poverty reduction.

scholarly journals Estimating the economic impact of a long–term hunting ban on local businesses in rural areas in Greece: a hypothetical scenario

2012 ◽  
Vol 35 (2) ◽  
pp. 163-170
Author(s):  
K. G. Papaspyropoulos ◽  
◽  
J. Koufis ◽  
L. Tourlida ◽  
A. Georgakopoulou ◽  
...  
Keyword(s):  
Rural Areas ◽  
Animal Rights ◽  
Small Businesses ◽  
Food Service ◽  
Face To Face ◽  
Hypothetical Scenario ◽  
Annual Earnings ◽  
Council Of State ◽  
The Impact

In December 2009, hunting was banned for a few days in Greece following the decision of the Council of State. The decision was issued when an animal rights organization claimed to the Court that there was no updated evidence about the impact of hunting on wild populations. This case prompted the present study, which focused on examining the hypothetical scenario of the possible impact of a long–term hunting ban on local businesses in rural areas in Greece. We carried out face–to–face interviews with entrepreneurs from the accommodation and food service sectors. Our results showed that most business owners interviewed considered the impact would be significant for their annual earnings. This finding should be taken into account by environmental decision makers because rural and mountainous areas in Greece are sparsely populated, and the few small businesses that still operate would not withstand drastic changes in rural tourism.

Empowering Small Businesses with Financial Technology: The Road Less Travelled

2021 ◽  
Vol 1 (1) ◽  
Author(s):  
Roksana Akter ◽  
◽  
Adrita Priyodarshini ◽  
Suborna Barua ◽  
Keyword(s):  
Financial Services ◽  
Small Businesses ◽  
Business Owners ◽  
Small Business Owners ◽  
Credit Management ◽  
Business Opportunity ◽  
The Road ◽  
Business Transactions ◽  
Mobile Financial Services ◽  
Financial Technology

Financial services remain untapped by most of the small business owners in Bangladesh. This limited access to mobile financial services and FinTech presents a business opportunity for the FinTech startups in the market. TallyKhata and Upayare digital financial services platforms visualizing to capture the untapped sector by becoming one of the first movers in the industry. This article has studied the cases of TallyKhata and Upay in empowering small businesses in Bangladesh through the services that have made business transactions and credit management hassle-free.

FINANCIAL INTERMINGLING IN KOREAN-AMERICAN AND MEXICAN-AMERICAN SMALL BUSINESSES

2009 ◽  
Vol 14 (03) ◽  
pp. 297-310 ◽  
Author(s):  
GEORGE W. HAYNES ◽  
JOSEPH I. ONOCHIE ◽  
MYUNG-SOO LEE ◽  
AlVIN N. PURYEAR ◽  
EDWARD G. ROGOFF ◽  
...  
Keyword(s):  
Small Business ◽  
Ethnic Groups ◽  
Rural Areas ◽  
Small Businesses ◽  
Mexican American ◽  
English Language ◽  
Business Owners ◽  
Korean American ◽  
Financial Resources ◽  
Small Business Owners

This study explores the financial intermingling behavior of Mexican-American and Korean-American owned and operated small businesses. It posits that ethnically-owned and -operated small businesses with strong familial ties and more limited access to financial capital are more likely to intermingle financial resources than other small businesses. Mexican-American small business owners typically have very strong familial ties, while Korean-American small business owners typically have very strong community ties. Perhaps more importantly, Mexican-American small business owners have less access to pools of community capital than Korean-American small business owners. Therefore, it is expected that Mexican-American small business owners are more likely to intermingle financial resources than Korean-American small business owners. Even when controlling for the time in United States and English language spoken in the household, this study suggests Mexican-American small business owners are more likely to intermingle financial resources than Korean-American small business owners. Within these two ethnic groups, similar factors contribute to intermingling. Small business owners living in rural areas and borrowers are more likely to intermingle financial resources for both ethnic groups.

scholarly journals Small Business Strategies for Sustainability Beyond 10 Years

2017 ◽  
Vol 16 (1) ◽  
Author(s):  
Gabriel E Warren ◽  
Lynn Szostek
Keyword(s):  
Small Business ◽  
Financial Management ◽  
Small Businesses ◽  
Business Models ◽  
Business Owners ◽  
Small Business Administration ◽  
Business Strategies ◽  
Small Business Owners ◽  
Sustainable Business ◽  
The U.S

Small businesses are vital to the health of the U.S. economy, as they account for approximately 50% of all jobs and 99% of all firms. Historically, there has been a problem with small businesses being able to sustain their operations beyond 10 years. According to the U.S. Small Business Administration, when averaged across all industries, approximately 75% of new businesses failed within the first 5 years. The purpose of this multiple case study was to explore the business strategies some small business owners use to sustain their company beyond 10 years of operation. Data were gathered through semistructured interviews and a review of financial documents with a purposive sample of eight small business owners. Transcript reviews and member checking were completed to assure credibility and trustworthiness. Based on the methodological triangulation of the data sources collected, four emergent themes were identified after completing the data analysis: (a) building relationships, (b) finding your passion, (c) enhancing business knowledge, and (d) ensuring financial management. Small business leaders and their stakeholders may use the findings to advance the evolution of sustainable business models that meet the needs of small business owners.

Effect of Financial Technology Loans on Financial Inclusion Among the Unbanked Low-Income Earners in Makueni County

2021 ◽  
Vol 3 (2) ◽  
pp. 1-12
Author(s):  
Samson Mutuku Mule ◽  
Fredrick Wafula ◽  
Nickson Agusioma
Keyword(s):  
Economic Growth ◽  
Low Income ◽  
Rural Areas ◽  
Financial Services ◽  
Small Businesses ◽  
Sampling Technique ◽  
Target Population ◽  
Financial Inclusion ◽  
Primary Data ◽  
Financial Technology

Financial inclusion is crucial in fostering individual prosperity, poverty eradication and stimulating economic growth. It is therefore a major policy concern for majority of governments across the world. Despite the rampant growth of financial technology in Kenya, the number of adults who are financially excluded is still high among the rural area residents. Lack of financial services access in rural areas has resulted to rural economic growth retardation and inequality. Further, financial exclusion has led to increased poverty levels because those excluded have been forced to depend on their limited savings to pursue their entrepreneurial interests. Small businesses have had no choice but to rely on their inadequate earnings to pursue viable business opportunities. The main objective of this study was to establish the effect of financial technology loans on financial inclusion among the unbanked low-income earners in Makueni County. Descriptive research design was used, with the target population being the unbanked low-income earners over the age of 18 in Makueni County. A sample size of 384 respondents was chosen using the convenience sampling technique. Personal interviews were conducted using an interview guide to collect primary data. The study found that fintech loans have a positive and significant effect on financial inclusion among the unbanked low-income earners in Makueni County. According to the findings of the study, since the unbanked people in Makueni County associate the use of financial technology loans to meeting personal financial needs and especially coping up with day-to-day expenses and emergencies, this study recommends that such people embrace the use of the fintech loans more as it will aid them in improving their financial lives to a greater extent. This is because for instance, by using the fintech loans, they can create employment for themselves and generate sufficient income by financing micro businesses using this credit.

YOUNG ENTREPRENEURS’ EXPERIENCES OF NAVIGATING THEIR SUCCESS

2016 ◽  
Vol 13 (1) ◽  
pp. 30-40
Author(s):  
Margie G. Booyens ◽  
Roshan Galvaan
Keyword(s):  
Young People ◽  
Small Businesses ◽  
Youth Unemployment ◽  
Young Person ◽  
Business Owners ◽  
Business Development ◽  
Western Cape ◽  
Small Business Development ◽  
Face To Face ◽  
Instrumental Case Study

One of the pathways out of youth unemployment is purported to be youth initiated business development. While the range of difficulties related to establishing small businesses has been widely documented, less is known about the ordinary experiences of young people who have successfully transitioned into work through small business development. We undertook a pilot instrumental case study to find out how the agency of young people is activated and supported to advance successful enterprises. Purposive sampling was applied to select three young business owners in three rural towns in the Western Cape. Two semi-structured face-to-face interviews were conducted with each business owner and one interview with a key mentor chosen by each young person. The findings focus on the relationship between the personal and social factors that contributed to opportunities for these young people. We also highlight key achievements, from the perspective of the young business owners, which do not point to financial success but to the value the owners place on their increased social standing and the social wellbeing their business has promoted in their home communities. Recommendations are made for the consideration of researchers, policy makers and providers of support for young business owners.

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