The Determinants of Credit Default on Portuguese Start-Up Firms:.An Econometric model

Vitor Gonçalves (), Francisco Vitorino Martins () and Elísio Brandão ()
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Vitor Gonçalves: Phd Student of Finance, FEP.UP
Francisco Vitorino Martins: Professor FEP.UP
Elísio Brandão: Professor of Finance, FEP.UP

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: In this paper we investigate the behaviour of credit default in start-up companies. Using a logit regression technique on a panel data of 1430 start-ups and considering a tracking period of three years, we tested the impact on the probability of occurrence of the first credit event in financing agreements due to variables grouped into three categories: financial capital, human capital and industry dynamics. We concluded from a financial point of view, that the support provided by partners in the financing of the company’s activity, the intensity of use of assets under management and reduced debt pay-back periods, were decisive in mitigating risk of default. In addition we found that the occurrence of a credit event will only be as limited as higher the quality of human capital held by the promoter of the project in terms of educational background and management experience.

Keywords: Credit Default; Start-Up; Financial Capital; Human Capital; Industry Dynamics (search for similar items in EconPapers)
JEL-codes: G33 M13 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2014-04
New Economics Papers: this item is included in nep-ban, nep-ent, nep-ger, nep-rmg and nep-sbm
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