The Role of Loan-Related Risk Appetite in the Relationship between Financial Risk Considerations and MSME Growth Decision: A Mediation Analysis

Ralph Stephen Leyeza, Mikka Marielle Boado, Obed Butacan, Donn Enrique Moreno () and Lourdes Deocariza
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Ralph Stephen Leyeza: E.T. Yuchengco College of Business, Mapúa Malayan Colleges Laguna, Cabuyao, Laguna 4025, Philippines
Mikka Marielle Boado: E.T. Yuchengco College of Business, Mapúa Malayan Colleges Laguna, Cabuyao, Laguna 4025, Philippines
Obed Butacan: E.T. Yuchengco College of Business, Mapúa Malayan Colleges Laguna, Cabuyao, Laguna 4025, Philippines
Donn Enrique Moreno: E.T. Yuchengco College of Business, Mapúa Malayan Colleges Laguna, Cabuyao, Laguna 4025, Philippines
Lourdes Deocariza: E.T. Yuchengco College of Business, Mapúa Malayan Colleges Laguna, Cabuyao, Laguna 4025, Philippines

JRFM, 2023, vol. 16, issue 5, 1-20

Abstract: While many studies have focused on assessing performance, studies that pivot on growth itself are limited. To contribute in this area, this study used the Stimulus-Organism-Response (SOR) Model as its foundation in order to explore how inflation and access to finance affected loan-related risk appetite, also known as their willingness to bear either debt-related or opportunity-related risks arising from loan acceptance or avoidance, respectively. Subsequently, the mediating effect of loan-related risk appetite between inflation and access to finance and growth decision was also investigated. The analysis of links between variables under scrutiny was premised on the utilization of partial least squares-structural equation modeling (PLS-SEM), with the data resulting from a purposive sampling method comprising 80 respondents who are owners and/or managers of their MSME business operating for at least two (2) years. The findings present that access to finance, as well as loan-related risk appetite, has direct links to growth decision. Access to finance was also found to have direct effects to loan-related risk appetite. On the other hand, it was found that loan-related risk appetite functions as a partial mediator between access to finance and growth decision. Contrarily, the aforementioned circumstances cannot be observed for inflation.

Keywords: financial risk; loan-related risk appetite; MSME growth decision; stimulus-organism-response (SOR) model; partial least squares-structural equation modeling (PLS-SEM); mediation (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2023
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