How do Banks Assess Entrepreneurial Competence? The Role of Voluntary Information Disclosure.
Research output: Journal contributions › Journal articles › Research › peer-review
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In: International Small Business Journal , Vol. 32, No. 5, 08.2014, p. 525-544.
Research output: Journal contributions › Journal articles › Research › peer-review
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TY - JOUR
T1 - How do Banks Assess Entrepreneurial Competence?
T2 - The Role of Voluntary Information Disclosure.
AU - Fink, Matthias
AU - Moro, Andrea
AU - Kautonen, Teemu
PY - 2014/8
Y1 - 2014/8
N2 - This article explores relationship lending in the small business context: it discusses the roles of entrepreneurial competence and voluntarily disclosed information as determinants of credit access. More specifically, it proposes 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 entrepreneur competence. Further, the article argues 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 these personal evaluations as inputs to lending decisions. © The Author(s) 2012.
AB - This article explores relationship lending in the small business context: it discusses the roles of entrepreneurial competence and voluntarily disclosed information as determinants of credit access. More specifically, it proposes 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 entrepreneur competence. Further, the article argues 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 these personal evaluations as inputs to lending decisions. © The Author(s) 2012.
KW - Management studies
KW - bank lending relationship
KW - competence
KW - entrepreneurship
KW - interest rate
KW - Entrepreneurship
UR - http://www.scopus.com/inward/record.url?scp=84903146115&partnerID=8YFLogxK
U2 - 10.1177/0266242612458444
DO - 10.1177/0266242612458444
M3 - Journal articles
VL - 32
SP - 525
EP - 544
JO - International Small Business Journal
JF - International Small Business Journal
SN - 0266-2426
IS - 5
ER -