How do banks assess entrepreneurial competence? The role of voluntary information disclosure
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© 2014 SAGE Publications. This is the post print version of the following article: Moro, A. & Fink, M. & Kautonen, T. 2014. How do banks assess entrepreneurial competence? The role of voluntary information disclosure. International Small Business Journal. Volume 32, Issue 5. 525-544. ISSN 0266-2426 (printed). DOI: 10.1177/0266242612458444, which has been published in final form at http://isb.sagepub.com/content/32/5/525.short.
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School of Business |
A1 Alkuperäisartikkeli tieteellisessä aikakauslehdessä
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Authors
Date
2014
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Mcode
Degree programme
Language
en
Pages
525-544
Series
International Small Business Journal, Volume 32, Issue 5
Abstract
This research adds to the literature on relationship lending in the small business context by discussing the roles of entrepreneurial competence and voluntarily disclosed information as determinants of credit access. More specifically, we propose that the loan manager’s evaluation of the information voluntarily disclosed by the entrepreneur is an important complement to publicly available financial data and soft information collected through observation and third parties in framing the loan manager’s perception of the entrepreneur’s competence. Further, we argue that banks charge lower interest rates if the loan manager perceives the entrepreneur to be competent. Econometric analysis based on 433 bank-firm relationships supports these hypothesised relationships. The results imply that entrepreneurs need to communicate their competence effectively to loan managers, and that banks should utilise their loan managers’ personal evaluations as inputs to lending decisions.Description
Keywords
SME, competence, interest rate, lending, bank, trust
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Citation
Moro, A. & Fink, M. & Kautonen, T. 2014. How do banks assess entrepreneurial competence? The role of voluntary information disclosure. International Small Business Journal. Volume 32, Issue 5. 525-544. ISSN 0266-2426 (printed). DOI: 10.1177/0266242612458444.