Default Rates in the Loan Market for SMEs: Evidence from Slovakia

Jarko Fidrmuc, Christa Hainz and Anton Malesich ()

No wp854, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: Banks entering an emerging market face a lot of uncertainty about the risks involved in lending. We use a unique unbalanced panel of nearly 700 shortterm loans made to SMEs in Slovakia between January 2000 and June 2005. Of the loans granted, on average 6.0 per cent of the firms defaulted. Several probit models and panel probit models show that liquidity and profitability factors are important determinants of SMEs defaults, while debt factors are less robust. However, we find that above average indebtedness significantly increases the probability of default. Moreover, the legal form that determines liability has important incentive effects.

Keywords: SME; Credit; Loan Default; Mortality Rates; Incentives; Probit; Panel Data (search for similar items in EconPapers)
JEL-codes: C25 G21 G33 (search for similar items in EconPapers)
Pages: pages
Date: 2006-11-01
New Economics Papers: this item is included in nep-ban and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Default rates in the loan market for SMEs: Evidence from Slovakia (2010)
Working Paper: Default Rates in the Loan Market for SMEs: Evidence from Slovakia (2009)
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