Personality-based selection of entrepreneurial borrowers to reduce credit risk: Two studies on prediction models in low- and high-stakes settings in developing countries

Research output: Journal contributionsJournal articlesResearchpeer-review

Authors

Small business growth is critical for economic development and poverty reduction in emerging markets, yet there remains an over $2 trillion gap in financing these entrepreneurs. This study explores the potential of personality assessments to help lenders solve this problem and lend to more entrepreneurs and contributes to psychological selection research by examining the effect of high versus low stakes on response distortions and predictive validity in a new area—entrepreneurship with a new dependent variable—paying back credit. Results of Study 1 show that personality assessments are indeed related to credit risk, but response patterns depend significantly on whether or not the assessment is taken as a mandatory part of the credit application (high stakes) or as an optional research survey after the credit has already been provided (low stakes), and predictive relationships do not generalize between these situations. In Study 2, the distributions of personality dimensions relevant for entrepreneurs applying for a credit—conscientiousness, extraversion, and integrity—are shown to be different for applicants when in high- versus low-stakes settings. These findings convey several implications for the research on and practice of lending to entrepreneurs in emerging markets and offer new directions for future research.

Original languageEnglish
JournalJournal of Organizational Behavior
Volume39
Issue number5
Pages (from-to)612-628
Number of pages17
ISSN0894-3796
DOIs
Publication statusPublished - 06.2018

DOI

Recently viewed

Publications

  1. The Financial Environment of Layoffs
  2. Calculation of Schmid factor in Mg alloys
  3. Patientenautonomie im Strafrecht
  4. Sustainability Accounting and Reporting
  5. Geschlechtergerechtigkeit
  6. Sustainable university research and development: inspecting sustainability in higher education research
  7. Auctionning biodiversity conservation contracts
  8. Graphic Novels im Spanischunterricht
  9. Critical reflections on ethnographic data collection in the highly gendered environment of male football.
  10. Interkulturelle Eignungsdiagnostik
  11. Divided we stand
  12. Führung richtig teilen
  13. Finden und Erfinden
  14. Untersuchungen zur Struktur und Dynamik der Serrahner Buchenwälder
  15. Sex differences in general knowledge in German high school students
  16. Tourism and Love
  17. Verbandsgeldbußen im Finanzsektor
  18. Facilitating stress prevention in micro and small-sized enterprises
  19. A new and benign hegemon on the horizon?
  20. Selbstreguliertes Lesen in der Sekundarstufe I aus der Sicht von Deutschlehrkräften
  21. Interkulturelles Vertrauen im globalisierten beruflichen Kontext
  22. Reviewing Effective Contents for a Gamification Approach to Foster Wellbeing among Adolescents
  23. Mit niedergeschlagenen Augen
  24. Stenotypy and eurytopy - Distribution models as a tool for estimating niche overlap in two spider species, Trochosa terricola and Eresus kollari (Araneae: Lycosidae/Eresidae).
  25. IGH - Tätigkeit 2010
  26. Arbeitsmarktintegration von Geflüchteten – ein wissenschaftliches Projekt mit höchst praktischem Ziel
  27. Crowdfunding for Responsible Entrepreneurship
  28. Gegengründungen
  29. Fatigue crack propagation influenced by laser shock peening introduced residual stress fields in aluminium specimens
  30. Der Later Life Workplace Index (LLWI)
  31. Social-Ecological Functional Types