How do Banks Assess Entrepreneurial Competence? The Role of Voluntary Information Disclosure.

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How do Banks Assess Entrepreneurial Competence? The Role of Voluntary Information Disclosure. / Fink, Matthias; Moro, Andrea; Kautonen, Teemu.

In: International Small Business Journal , Vol. 32, No. 5, 08.2014, p. 525-544.

Research output: Journal contributionsJournal articlesResearchpeer-review

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@article{59a7c0b95db643308a5c086afd226f18,
title = "How do Banks Assess Entrepreneurial Competence?: The Role of Voluntary Information Disclosure.",
abstract = "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. {\textcopyright} The Author(s) 2012.",
keywords = "Management studies, bank lending relationship, competence, entrepreneurship, interest rate, Entrepreneurship",
author = "Matthias Fink and Andrea Moro and Teemu Kautonen",
year = "2014",
month = aug,
doi = "10.1177/0266242612458444",
language = "English",
volume = "32",
pages = "525--544",
journal = "International Small Business Journal",
issn = "0266-2426",
publisher = "SAGE Publications Inc.",
number = "5",

}

RIS

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 -

DOI