scholarly journals FACTORS DETERMINING BANK LOAN APPROVAL AS SOURCE OF FINANCING FOR MICRO, SMALL, AND MEDIUM ENTERPRISES (MSME) IN JAKARTA

2018 ◽  
Vol 2 (1) ◽  
pp. 226
Author(s):  
Margarita Ekadjaja
Keyword(s):  
Logistic Regression ◽  
Small And Medium Enterprises ◽  
Education Level ◽  
Bank Loans ◽  
Bank Loan ◽  
Accounting System ◽  
Loan Repayment ◽  
Good Relationship ◽  
Loan Approval ◽  
Medium Enterprises

In running business, the owners of Micro, Small, and Medium Enterprises (MSME) have main weaknesses, in which they do not conduct good accounting system or financial records, thus creating difficulties in developing analysis for future business planning. Most of MSME owners run their business by relying on instincts, while business analysis and accounting system are necessary when they apply for bank loan.The aim of this study is to reveal some variables of MSME that become the determinants of their bank loans approval. These variables are: Business Age since Establishment, Total Assets Turnover, Owner’s Total Assets, Credit Duration, Owner’s Education Level, Good Relationship with the Bank, Collateral Amount, and Loan Repayment Criteria. The samples of this study were taken from entrepreneurs selling clothes and apparels in Tanah Abang by conducting direct interview and fulfilling the questionnaire. The questionnaire consists of three major parts, which are business owner’s profile, credit analysis, and evaluation on simple financial report. This study uses logistic regression method, in which there is only one dependant variable with dummy 1-0 (Bank Loan Approval, granted = 1 and rejected = 0) along with eight independent variables.This study concludes that Business Age since Establishment, Total Assets Turnover, Owner’s Education Level, Collateral Amount, and Loan Repayment Criteria, have positive and significant effects on Bank Loan Approval. Meanwhile, Owner’s Total Assets, Credit Duration, and Good Relationship with the Bank do not affect Bank Loan Approval significantly.Keywords: MSME, bank loan approval, logistic regression

scholarly journals Determinants of New Small and Medium Enterprises (SMEs) Access to Bank Credit: Case Study in the Phu Tho Province, Vietnam

2017 ◽  
Vol 12 (7) ◽  
pp. 83 ◽  
Author(s):  
Hung D. Pham
Keyword(s):  
Small And Medium Enterprises ◽  
Business Plan ◽  
Bank Loans ◽  
Government Support ◽  
Bank Loan ◽  
Credit Access ◽  
Business Plans ◽  
Explanatory Variables ◽  
Total Capital ◽  
Medium Enterprises

Small and medium-sized enterprises (SMEs) play a very important role in the Vietnamese economy. Specifically, new SMEs are seen as a suitable solution to cope with development issues such as poverty and a high unemployment rate. In Vietnam, a high SME failure rate is due to lack of capital and poor managerial experience of owners. Most existing research on SMEs focuses on well-established stages, and less attention is paid to new SMEs. This paper investigates the determinants of credit access by SMEs existing for less than forty-two months in the Phu Tho province located in Northern Vietnam. The quantitative data were collected from 259 SMEs in 2015. The regression analysis reveals that a business plan, the firm size, and networking (emotional trust, knowledge trust, and approachability) are the main drivers of access to bank loans by new SMEs. About 64% (165 observations) of new SMEs in our sample did not get any bank loan caused by high collateral requirements, unfavorable interest rate, poor business plans, limited networking, and lack of government support. The results also indicate that, among the selected explanatory variables, having a concrete business plan significantly affects the bank loan ratio (total bank loans over total capital). Based on these results, we derived political implications.

scholarly journals The factors affecting accessibility to credit capital of small and medium enterprises in Vietnam

2019 ◽  
Vol 15 (6) ◽  
pp. 15-25
Author(s):  
Phung The Dong ◽  
Nguyen Thi Hong Nham
Keyword(s):  
Interest Rates ◽  
Small And Medium Enterprises ◽  
Probit Model ◽  
Bank Loans ◽  
Bank Loan ◽  
Factors Affecting ◽  
Business Loan ◽  
The Government ◽  
Medium Enterprises ◽  
The Impact

The difficulty in accessing loans is one of the major barriers to the development of small and medium enterprises (SMEs) in Vietnam. Low accessibility to capital forces SMEs to spend both official and unofficial costs in order to obtain loans, and/or to access the unofficial market at higher interest rates, thereby increasing cost of production of enterprises. Studies suggest that the determinants of bank loan processing through which small and medium enterprises can access official loans include: characteristics of enterprises; indicators, reflecting the performance of enterprises; characteristics of loans; characteristics of enterprises, enterprise owners; geographical position of enterprises; the creditworthiness of enterprises and the role of the network.Purpose of the study.The aim of this paper is the quantitative analysis of the factors, affecting accessibility to credit capital of small and medium enterprises in Vietnam.Materials and methods.This study was conducted on the basis of a survey in December 2017. The survey includes 301 enterprises in Hanoi city. Selected enterprises are also enterprises, surveyed in the annual enterprise survey by the General Statistics Office of Vietnam. This paper uses the Probit and Logit regression approach to estimate the impact of factors, affecting the disbursement probability of a loan of an enterprise. The number of SMEs accounts for 56.69% of the samples. The number of enterprises, applying for a bank loan accounts for 58.4% of the total samples, of which the percentage of disbursed loans for SMEs accounts for only 47.3%. For enterprises without a bank loan, eliminating the reasons for the lack of demand and unwish to be in debt, the main reasons not to access bank loans are high interest rates, complicated loan procedures and insufficient collateral.Results.The results obtained from the Logistic and Probit models show that the estimated coefficients are statistically significant, affecting the probability of taking a business loan, accepted by financial institutions. Although the coefficients, estimated from Logistics model are larger than those estimated from the Probit model, the estimated results show that the direction of impact of the variables in two estimation techniques gives quite similar results.Conclusion.Based on the results of this study, the Government of Vietnam should implement policies to support SMEs in the direction of improving their access to capital. The credit institutions should design products and services suitable to the characteristics of SMEs in Vietnam.

scholarly journals What determines the allowance of bank loans for investment – an overview of Kosovo SMEs

2015 ◽  
Vol 1 (1) ◽  
pp. 27-35
Author(s):  
Florin Peci
Keyword(s):  
International Trade ◽  
Linear Regression ◽  
Econometric Model ◽  
Small And Medium Enterprises ◽  
Business Plan ◽  
Bank Loans ◽  
Bank Loan ◽  
Using Data ◽  
Medium Enterprises ◽  
Investment Growth

The present study determines firm and entrepreneurship characteristics of small and medium enterprises (SMEs) active in international trade towards investment and growth. Using data collected through self-administered interviews with 180 SMEs in Kosovo, we investigated factors that influence the investment growth financed by bank loans. Econometric model of linear regression indicates that a large number of firm and entrepreneur characteristics including experience, sector, business plan, audit statements, collateral significantly affect investment growth. Our findings suggest that especially education of SMEs managers have higher rate of financing sources through bank loan. The study concludes with respective findings translated into recommendations, which have to be considered by relevant stakeholders active in entrepreneurship and policymaking.

scholarly journals Are bank loans to SMEs procyclical? Evidence from an analysis of the lending behavior of Korean banks

2013 ◽  
Vol 44 (2) ◽  
pp. 67-86 ◽  
Author(s):  
Ji-Yong Seo
Keyword(s):  
Small And Medium Enterprises ◽  
Generalized Least Squares ◽  
Governance Structure ◽  
Fixed Effect Model ◽  
Bank Loans ◽  
Bank Loan ◽  
Cross Sectional ◽  
Vector Error Correction ◽  
Medium Enterprises ◽  
Lending Behavior

This paper investigates the procyclicality of bank loans to Small and Medium Enterprises (SMEs) and to Large Enterprises (LEs) using aggregated and cross-sectional data from major private, foreign, and state-owned banks in Korea in the period from 1999 to 2008. Based on previous studies, it is hypothesized that compared to LEs, banks loans to SMEs may be more vulnerable to external economic shock. Berger and Udell (1994) suggested that bank loans to SMEs are comparatively risky due to their relatively low collateral and heavy dependence on banks for raising funds. In this study, empirical tests are verified by applying the rolling vector error correction Model (VECM), panel generalized least squares model (GLS), and the Clustering Fixed Effect Model. Findings include robust support for the procyclicality of bank loan to SMEs, but not for LEs. The review of short-term dynamics among first differential variables such as loans and GDP provides evidence to support a related hypotheses: the profit-oriented motivation of commercial banks in enhancing relationships with SMEs, the characteristics of governance structure in three types of banks (private, state-owned, and foreign owned banks), and the large-bank barriers assumption.

scholarly journals DETERMINANT OF MICROCREDIT REPAYMENT

2016 ◽  
Vol 19 (1) ◽  
pp. 57-80
Author(s):  
Farida Farida ◽  
Hermanto Siregar ◽  
Nunung Nuryartono ◽  
Eka Intan KP
Keyword(s):  
Logistic Regression ◽  
Moral Hazard ◽  
Food Consumption ◽  
Education Level ◽  
Screening Process ◽  
Loan Repayment ◽  
Central Java ◽  
Credit Default ◽  
Gender Education

This paper investigate the determinants of microcredit repayment by employing the logistic regression on micro-business households in Pati, Central Java. The result of this study reveals that loan repayment affected significantly by the business lines, food consumption spending, side job, other loan sources, collateral, and credit constrained. Interestingly, the result concludes that the loan repayment are no longer influenced by moral hazard, since the characteristics such as gender, education level, age, experience do not significantly encourage borrowers to repay. This paper also conform the important role of peer-screening process on hindering the credit default.

scholarly journals Emisiones sindicadas de obligaciones como alternativa de financiamiento para las PyME del sector metalmecánico en Guayaquil // Syndicated issues of obligations as a financing alternative for SMEs in the metalworking sector in Guayaquil

Ciencia Unemi ◽  
2017 ◽  
Vol 10 (22) ◽  
pp. 11-19
Author(s):  
Daniela Jácome Haz ◽  
Christian Morán Montalvo ◽  
Leslie Rodríguez-Valencia
Keyword(s):  
Stock Market ◽  
Small And Medium Enterprises ◽  
Descriptive Study ◽  
Bank Loans ◽  
Web Portals ◽  
Financial Instrument ◽  
Secondary Sources ◽  
Survey Technique ◽  
Medium Enterprises ◽  
Operational Scheme

Las participación de las pequeñas y medianas empresas  (PyMEs) dentro del mercado de valores, fue un objetivo casi inalcanzable, debido a que existían requisitos que en su mayoría no podían cumplirse. Mejía (2007), refiere que los obstáculos para ingresar al mercado de valores, son motivos por los cuales las PyMEs acudan al crédito tradicional como fuente de financiamiento. Es por esto que el presente trabajo tiene como objetivo desarrollar el esquema operativo de las emisiones sindicadas de obligaciones como instrumento financiero, para la PyMEs del sector metalmecánico en Guayaquil, Ecuador. Para cumplir con este objetivo se realizó un estudio descriptivo comparativo utilizando la técnica de encuestas; además, se hizo uso de fuentes secundarias como los portales de web, revisión bibliográfica, entre otros. De los hallazgos se identifica que las PyMEs se financiaban exclusivamente con proveedores, debido a la restricción de los créditos bancarios; sin embargo se ha reconocido otras formas de financiamiento como el mercado de valores de Ecuador. // The participation of Small and Medium Enterprises (SMEs) in the market, was a goal almost unattainable, because there are requirements to be met most of whom could not be fulfilled. Mejia (2007), points out that the obstacles to entering the stock market are the reasons why SMEs ask for traditional credit as a financing source. That is why this paper aims to develop the operational scheme of syndicated issues of obligations as a financial instrument for SMEs in the metalworking sector in Guayaquil, Ecuador. To achieve this objective, a comparative descriptive study was carried out using the survey technique; In addition, secondary sources such as web portals, bibliographic review, and others were used. The findings identify that SMEs were financed exclusively from suppliers, due to the restriction of bank loans; however, other forms of financing have been recognized, such as the Ecuadorian stock market.

scholarly journals Determining factors in MSMEs success: An empirical study in Mexico

2022 ◽  
Vol 6 (1) ◽  
pp. e384
Author(s):  
Rubén Molina-Sánchez ◽  
Domingo García-Pérez-de-Lema ◽  
Alejandra López-Salazar ◽  
Roberto Godínez-López
Keyword(s):  
Logistic Regression ◽  
Regression Analysis ◽  
Empirical Study ◽  
Small And Medium Enterprises ◽  
Binary Logistic Regression ◽  
Binary Logistic Regression Analysis ◽  
Technology And Innovation ◽  
Determining Factors ◽  
Quality Technology ◽  
Medium Enterprises

This work empirically analyzes the competitive factors that help make micro, small, and medium enterprises (MSMEs) successful. To do this, an empirical study with a sample of 614 companies in Guanajuato, Mexico, has been carried out. The results of the binary logistic regression analysis show that quality, technology, and innovation are the main variables that determine a company’s success. These findings could provide guidelines to help MSMEs improve their competitiveness, and they could help public administrations better support MSME growth.

Bank Loans with Chinese Characteristics: Some Evidence on Inside Debt in a State-Controlled Banking System

2011 ◽  
Vol 46 (6) ◽  
pp. 1795-1830 ◽  
Author(s):  
Warren Bailey ◽  
Wei Huang ◽  
Zhishu Yang
Keyword(s):  
Banking System ◽  
Bank Loans ◽  
Bank Loan ◽  
Inside Information ◽  
Inside Debt ◽  
Social Instability ◽  
Chinese Characteristics ◽  
Loan Approval ◽  
Loan Announcements ◽  
Local Stock

AbstractWe study a transitional economy where state-controlled banks make loan decisions based on noisy inside information on prospective borrowers, and may lend to avert unemployment and social instability. In China, poor financial performance and high managerial expenses increase the likelihood of obtaining a bank loan, and bank loan approval predicts poor subsequent borrower performance. Negative event study responses occur at bank loan announcements, particularly for borrowers measuring poorly on quality and creditworthiness, or for lenders or borrowers involved in litigation regarding loans. Our results highlight dilemmas in a state-led financial system and the local stock market’s sophistication in interpreting news.

scholarly journals The Causal Effect of Access to Finance on Productivity of Small and Medium Enterprises in Vietnam

2019 ◽  
Vol 11 (19) ◽  
pp. 5451 ◽  
Author(s):  
Mai Huong Giang ◽  
Bui Huy Trung ◽  
Yuichiro Yoshida ◽  
Tran Dang Xuan ◽  
Mai Thanh Que
Keyword(s):  
Financial Services ◽  
Small And Medium Enterprises ◽  
Manufacturing Sector ◽  
Causal Effect ◽  
Bank Loan ◽  
Firm Productivity ◽  
Function Estimation ◽  
Access To Finance ◽  
The Government ◽  
Medium Enterprises

In many developing countries, obtaining financial services at affordable rates and fair terms has been a significant challenge for small and medium enterprises (SMEs). However, this issue has not been paid much attention in Vietnam, even though SMEs account for about 95% of total enterprises and the financial market of the country has not been well developed. This study investigates the causal effects of access to finance on productivity of SMEs operating in the manufacturing sector in Vietnam. Productivity was measured as the total factor productivity (TFP) obtained by production function estimation using the Levinsohn and Petrin approach. Regarding financial accessibility, two factors covered the extent to which firms might have a bank loan or overdraft facility were employed. To study the causal inferences of access to finance on firm productivity, the research adopted the difference-in-differences (DID) approach, as well as the propensity score matching (PSM) coupled with DID technique. The empirical results indicated that improving the financial accessibility could directly enhance firm productivity. Particularly, it was shown that firms having access to a bank loan could significantly improve TFP by approximately 8.6% in the DID model and about 9% in the PSM-DID model. Meanwhile, the firm average TFP increased by approximately 12.3% and 15.7% in simple DID and PSM-DID models, respectively, when firms had an overdraft facility. These findings suggest that the government should put more effort into assisting SMEs in generating bankable projects, and create a sound and healthy financial environment to stimulate firms’ access to finance, which will ensure their sustainability and growth.

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