Credit scoring of small and medium enterprises: a behavioural approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Akanksha Goel ◽  
Shailesh Rastogi
Keyword(s):  
Small And Medium Enterprises ◽  
Credit Scoring ◽  
Reliability And Validity ◽  
Uttar Pradesh ◽  
Indian States ◽  
Psychological Traits ◽  
Content Type ◽  
Psychological Constructs ◽  
Credit Default ◽  
Medium Enterprises

Purpose 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. Design/methodology/approach 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. Findings 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. Practical implications 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. Originality/value 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.

Understanding the impact of borrowers' behavioural and psychological traits on credit default: review and conceptual model

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Akanksha Goel ◽  
Shailesh Rastogi
Keyword(s):  
Conceptual Model ◽  
Credit Scoring ◽  
Psychological Traits ◽  
Content Type ◽  
Scoring Model ◽  
Psychological Constructs ◽  
Credit Default ◽  
Credit History ◽  
The Impact ◽  
Credit Scoring Model

PurposeThe 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.Design/methodology/approachThe 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.FindingsThe 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.Practical implicationsThe 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.Originality/valueBy 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.

Development and validation of knowledge management performance measurement constructs for small and medium enterprises

2015 ◽  
Vol 19 (4) ◽  
pp. 711-734 ◽  
Author(s):  
Cheng Sheng Lee ◽  
Kuan Yew Wong
Keyword(s):  
Knowledge Management ◽  
Performance Measurement ◽  
Service Sector ◽  
Small And Medium Enterprises ◽  
Reliability And Validity ◽  
Survey Instrument ◽  
Management Performance ◽  
Content Type ◽  
Measurement Models ◽  
Medium Enterprises

Purpose – This paper aims to address the lack of previous studies and to propose a reliable and valid knowledge management performance measurement (KMPM) model for small and medium enterprises (SMEs). Design/methodology/approach – A survey instrument containing 13 constructs and 49 items was initially developed and posted to small and medium-sized consultancy firms in Malaysia. Reliability and validity analysis was performed to ensure the quality of the instrument. Findings – The developed survey instrument was shown to be reliable, valid and suitable to be applied in SMEs to evaluate their knowledge management (KM) performance. Research limitations/implications – The present study is limited to SMEs in the service sector. The results are not suitable to be generalized to the manufacturing sector or larger organizations without further research. Practical implications – This study would provide SMEs with a better understanding on KMPM and also a guideline to refer to when measuring their KM performance. Academics can use this study as a basic model to explore KMPM in SMEs and develop new measurement models. Originality/value – This study is believed to be the first that has scientifically developed and empirically tested the constructs that represent a comprehensive KMPM model tailored for SMEs.

scholarly journals Intellectual capital in small and medium enterprises in Pakistan

2015 ◽  
Vol 16 (1) ◽  
pp. 224-238 ◽  
Author(s):  
Muhammad Khalique ◽  
Nick Bontis ◽  
Jamal Abdul Nassir bin Shaari ◽  
Abu Hassan Md. Isa
Keyword(s):  
Organizational Performance ◽  
Intellectual Capital ◽  
Goodness Of Fit ◽  
Small And Medium Enterprises ◽  
Manufacturing Sector ◽  
Reliability And Validity ◽  
Electronics Manufacturing ◽  
Policy Makers ◽  
Content Type ◽  
Medium Enterprises

Purpose – The purpose of this paper is to evaluate the links between intellectual capital sub-components and organizational performance in small and medium enterprises (SMEs) operating in the electrical and electronics manufacturing sector in Pakistan. Design/methodology/approach – Data were collected through structured questionnaires from a sample of 247 respondents from Pakistani SMEs in Gujranwala and Gujarat. Several tests were used to examine the reliability and validity of the research instrument. Finally, multiple regression analysis was used to test the proposed research hypotheses. Findings – The findings of this study demonstrate that the overall regression model of intellectual capital shows goodness of fit while one component of intellectual capital – namely human capital – appeared insignificant. Subsequently, six out of seven research hypotheses was accepted. Practical implications – This study will provide a valuable framework for entrepreneurs, executives, managers and policy makers in managing intellectual capital within the Pakistani context. Originality/value – To the best knowledge of the authors, this is the first empirical study that has been conducted on SMEs operating in the electrical and electronics manufacturing sector in Pakistan.

Twiga Hosting Ltd – providing affordable information and communication technologies services to small and medium enterprises

2011 ◽  
Vol 1 (4) ◽  
pp. 1-16
Author(s):  
Juma James Masele
Keyword(s):  
Information And Communication Technologies ◽  
Undergraduate Students ◽  
Success Factors ◽  
Small And Medium Enterprises ◽  
Innovation Management ◽  
Communication Technologies ◽  
Subject Area ◽  
Content Type ◽  
Information And Communication ◽  
Medium Enterprises

TitleTwiga Hosting Ltd – providing affordable information and communication technologies services to small and medium enterprises.Subject areaThe case describes the launch of Twiga Hosting Ltd, a company providing information and communication technology (ICT) services to the underserved small and medium enterprise (SME) sector in Tanzania and in a many countries in Africa.Study level/applicabilityThis case targets a range of audience from undergraduate students taking both Bachelor of Commerce and those taking Bachelor of Business Administration; and Postgraduate students taking business‐related courses. Nonetheless, the case may be used by all other learners of advanced studies in entrepreneurship and innovation management.Case overviewThe case addresses a number of issues including: Issues to be considered when starting an ICT enterprise. Strategic management. Business revenue models.Expected learning outcomes To impart/inculcate entrepreneurial insights in ICT and related areas. To make learners aware of the business growth opportunities in ICT ventures. The success factors for fruitful ICT ventures. To enable learners to identify challenges facing entrepreneurs in ICT ventures and the ways to overcome them.Supplementary materialsTeaching notes.

Relevant factors of innovation contests for SMEs

2017 ◽  
Vol 23 (6) ◽  
pp. 1196-1215 ◽  
Author(s):  
Maria Isabel Rodriguez Ferradas ◽  
José A. Alfaro Tanco ◽  
Francesco Sandulli
Keyword(s):  
New Product Development ◽  
Corporate Culture ◽  
Small And Medium Enterprises ◽  
Retrospective Case ◽  
Content Type ◽  
Context Factors ◽  
Medium Enterprises ◽  
Design Factors ◽  
Relevant Factors

Purpose The purpose of this paper is to explore the relevant factors that influence the implementation of innovation contests, an open innovation (OI) practice that has been extensively reported in the literature as a managerial tool for external knowledge search. The authors focus the study on the context of small and medium enterprises (SMEs). Design/methodology/approach The approach is a retrospective case study. This methodology allows an in-depth view into a Spanish SME that successfully undertook two new product development processes thanks to the deployment of innovation contests. Findings The main context factors influencing innovation contests as managerial tool are ambidexterity, technological and marketing turbulence and intermediaries, among others. Regarding design factors, this work highlights the role of attraction and facilitation. Additionally, the repetitive implementation of innovation contests creates a corporate culture that promotes OI activities. Practical implications Managers will understand that they can use innovation contests as a managerial tool, and knowing the factors that need to be taken into account when implementing an innovation contest will help SMEs managers to make better use of this practice. Originality/value This case study enriches the literature of both innovation contests and topics relevant to SMEs. Based on a theoretical framework of the design factors that influence the implementation of innovation contests, the authors propose a research framework that incorporates those context factors in association with an SME.

Effects of cloud computing assimilation on supply chain financing risks of SMEs

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Qiang Lu ◽  
Jinliang Chen ◽  
Hua Song ◽  
Xiangyu Zhou
Keyword(s):  
Cloud Computing ◽  
Supply Chain ◽  
Small And Medium Enterprises ◽  
Supply Chain Integration ◽  
Content Type ◽  
Supply Chain Financing ◽  
Medium Enterprises ◽  
The Relationship ◽  
Moderating Role

Purpose The purpose of this study is to examine how cloud computing assimilation reduces supply chain financing (SCF) risks of small and medium enterprises (SMEs). This study also investigated the mediating roles of internal and external supply chain integration between cloud computing assimilation and the SCF risks of SMEs, as well as the moderating role of environmental competitiveness. Design/methodology/approach Data was collected from surveys of SMEs located in China. Multiple regression analysis was used to validate the proposed theoretical model and research hypotheses. Findings The findings show that cloud computing assimilation could reduce the SCF risks of SMEs directly. The results also indicate that both internal and external supply chain integration mediate the relationship between cloud computing assimilation and SCF risks. Furthermore, environmental competitiveness inhibits the effects of cloud computing assimilation on SCF risks. Originality/value To our best knowledge, this is the preliminary study to explore the role of cloud computing assimilation in reducing the SCF risks of SMEs. Also, this study attempted to investigate the process by which cloud computing assimilation affects the SCF risks of SMEs.

How to survive in the age of artificial intelligence? Exploring the intelligent transformations of SMEs in central China

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jinqiang Wang ◽  
Yaobin Lu ◽  
Si Fan ◽  
Peng Hu ◽  
Bin Wang
Keyword(s):  
Artificial Intelligence ◽  
Small And Medium Enterprises ◽  
Policy Support ◽  
Central China ◽  
Limited Resources ◽  
Text Data ◽  
Content Type ◽  
External Pressures ◽  
Medium Enterprises

PurposeThe purpose of the research is to explore how small and medium enterprises (SMEs) in central China achieve intelligent transformation through the use of artificial intelligence (AI). Because of unequal resource allocation, constraints on the intelligent transformation of SMEs in central China are different from those in economically and technologically well-developed coastal provinces. Hence, the authors focus on SMEs in central China to identify drivers of and barriers to intelligent transformation.Design/methodology/approachThe interview data were collected from 66 SMEs across 20 industries in central China. To verify the validity of the data collection method, the authors used two methods to control for retrospective bias: multi-level informants and enterprises' AI project application materials (Wei and Clegg, 2020). The final data were validated without conflicts. Next, the authors cautiously followed a two-step approach recommended by Venkatesh et al. (2010) and used NVivo 11.0 to analyze the collected text data.FindingsSMEs in central China are enthusiastic about intelligent transformation while facing both internal and external pressures. SMEs need to pay attention to both internal (enterprise development needs, implementation cost, human resources and top management involvement) and external factors (external market pressure, convenience of AI technology and policy support) and their different impacts on intelligent transformation. However, constrained by limited resources, SMEs in central China have been forced to take a step-by-step intelligent transformation strategy based on their actual needs with the technological flexibility method in the short term.Originality/valueConsidering the large number of SMEs and their importance in promoting China's economic development and job creation (SME Bureau of MIIT, 2020), more research on SMEs with limited resources is needed. In the study, the authors confirmed that enterprises should handle “social responsibility” carefully because over-emphasizing it will hinder intelligent transformation. However, firms should pay attention to the role of executives in promoting intelligent transformation and make full use of policy support to access more resources.

Big data-driven supply chain and performance: a resource-based view

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shampy Kamboj ◽  
Shruti Rana
Keyword(s):  
Big Data ◽  
Supply Chain ◽  
Small And Medium Enterprises ◽  
Data Driven ◽  
Equation Modeling ◽  
Firm Age ◽  
Content Type ◽  
Sustainable Performance ◽  
Medium Enterprises

PurposeThe main objective of this paper is to study the role of supply chain performance (SCP) as a mediator between big data-driven supply chain (BDDSC) and firm sustainable performance. In addition, the role of firm age as a moderator between BDDSC and SCP as well as between SCP and firm sustainable performance has also been explored.Design/methodology/approachThe 200 managers of medium or senior level positions in micro, small and medium enterprises (MSMEs) located at Delhi-NCR have been contacted. Further, collected data have been confirmed with confirmatory factor analysis (CFA). In this paper, structure equation modeling (SEM) has been employed to empirically check the proposed hypotheses and their relationships.FindingsThe findings confirmed that SCP mediates the link between BDDSC and firm sustainable performance. Additionally, firm age moderates the association between BDDSC and SCP as well as between SCP and firm sustainable performance.Research limitations/implicationsThe role of SCP and firm age between BDDSC and sustainable performance have been examined in the context of MSMEs in Delhi-NCR and thereby limit the generalization of results to other industries and country contexts.Originality/valueThe present study adds to the existing literature via recognizing the blackbox using SCP and firm age to comprehend BDDSC and firm sustainable performance relationship.

Determinants and outcomes ofe-business adoption among manufacturing SMEs: Insights from a developing country

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muneer Abbad ◽  
Ibrahim Hussien Musa Magboul ◽  
Kholoud AlQeisi
Keyword(s):  
Structural Equation ◽  
Small And Medium Enterprises ◽  
Ease Of Use ◽  
Government Support ◽  
Relative Advantage ◽  
Perceived Ease Of Use ◽  
Content Type ◽  
Business Practitioners ◽  
Using Data ◽  
Medium Enterprises

Purpose In response to a turbulent industrial environment, especially for small and medium enterprises (SMEs), organizations have widely adopted e-business to improve their processes. This study aims to propose a model that encapsulates the determinants and outcomes of e-business adoption. Design/methodology/approach The determinants and outcomes of e-business adoption were tested using data gathered from 282 managers and analysed using structural equation modelling techniques. Findings The results indicated that owner support, perceived ease of use and government support were important determinants that influence e-business adoption. Attitude, competitive pressureand relative advantage were not significant. Regarding outcomes, e-business adoption had a major impact on SME functioning and operational progress; however, it had no influence on competitive advantage. Originality/value By ascertaining the determinants and outcomes of e-business adoption, the findings provide e-business practitioners and managers with guidelines that can encourage more efficient and effective e-business adoption within their organizations. The results also provide a basis for more precise e-business studies to be conducted in developing countries.

Technical efficiency and its determinants in the Indian textile garments industry

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdulla ◽  
Shiv Kumar
Keyword(s):  
Panel Data ◽  
Technical Efficiency ◽  
Textile Industry ◽  
Small And Medium Enterprises ◽  
Stochastic Frontier ◽  
Efficiency Score ◽  
Value Chains ◽  
Small Scale ◽  
Content Type ◽  
Medium Enterprises

Purpose This paper aims to examine technical efficiency and its determinants in Indian textile garments industry in post-agreement on textiles and clothing regime and evaluate the technical efficiency among micro, small and medium enterprises (MSMEs) firms. Design/methodology/approach This study uses unbalanced panel data for the period 2005–2010 to 2015–2016. The stochastic frontier function is used to estimate technical efficiency and its determinants. Findings The results show that the overall ecosystem of textile garments’ value chains could be improved to enhance the technical efficiency thereof. The result also reveals that small-scale firms have the highest technical efficiency scores, and medium-scale firms have the least technical efficiency score among all the categories of MSMEs. Research limitations/implications The textile garments industry needs to define its innovation strategies, as these strategies lead to different results that can be achieved only through the management of resources dedicated to the generation and implementation of innovations. Practical implications This study has shown that to offset India’s cost disadvantage in the international markets, there is a need to develop an ecosystem of textile manufacturing and value chains, eliminate the inverted duty structure (where inputs are taxed at a higher rate than the final product) and switch over from shuttle looms toward shuttle-less looms. This would unleash the potential of textile and garments industry and make it globally competitive and technically efficient. Further, there will be an alignment with the ease of doing business with an appropriate mix of policy, technology, institution, infrastructure, information and services. Originality/value Using frontier production function takes stochastic context into account for the dynamic character of technical efficiency and its components. Most of the past studies have assessed technical efficiency at the aggregate level using three-digit National Industrial Classification (NIC) or four-digit NIC code. An analysis at higher levels of aggregation masks the variation in technical efficiency. This study used five-digit NIC data to measure the firm-specific technical efficiency of the textile industry. According to the authors’ knowledge, this study is the first of its kind in the Indian textile industry using stochastic frontier approach and panel data. Further, it also looks at the contribution of different determinants in technical efficiency to the firms.

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