The role of trust in SMEs' access to sufficient credit for growth
No Thumbnail Available
URL
Journal Title
Journal ISSN
Volume Title
School of Business |
Master's thesis
Ask about the availability of the thesis by sending email to the Aalto University Learning Centre oppimiskeskus@aalto.fi
Authors
Date
2017
Department
Johtamisen laitos
Major/Subject
Mcode
Degree programme
Entrepreneurship and Innovation Management
Language
en
Pages
59
Series
Abstract
Objective The purpose of this paper is to empirically investigate the role of trust in SMEs’ ac-cess to a sufficient amount of bank credit to finance growth. The paper focuses on the SME per-spective, and measures trust and credit access as the SME manager’s subjective view. The empiri-cal analysis aims to find a link between an SME manager’s perception of the bank’s trustworthi-ness and the SME’s perceived access to a sufficient amount of credit for growth investments. Data and methodology The data collection was conducted through a survey among SMEs in Finland, identified from the Orbis database. The final sample consisted of 344 Finnish SMEs. The analysis was performed using binomial logistic regression, where the dependent variable was iden-tified as a dummy indicating whether or not the SME has access to enough bank funding for growth. The predictor variables consisted of a categorical measure of trust between the SME and the bank, as well as a set of control variables to account for the potential impact of traditional transaction lending and relationship lending indicators, as well as demographic factors. Empirical findings The results indicate that there is a statistically significant, positive rela-tionship between the level of trust between the bank and the SME and the SME’s access to a suffi-cient amount of credit to fund growth. The regression analysis shows that a one-unit increase in the SME manager’s perception of the bank’s trustworthiness leads on average to an 18.6% increase in the probability that the SME will have access to enough funding. Combined with the evidence from previous research, the findings suggest that SMEs should focus on developing and strength-ening the level of trust in their bank relationships, in order to improve their future credit access.Description
Thesis advisor
Kautonen, TeemuKeywords
SME finance, trust, relationship lending, credit access