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 Stephen M. Ross Business School

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: G33 G21 C25 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban and nep-rmg
Date: 2006-11-01
View list of references View citations in EconPapers

Downloads: (external link)
http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp854.pdf

Related works:
Working Paper: Default Rates in the Loan Market for SMEs:Evidence from Slovakia (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:wdi:papers:2006-854

Access Statistics for this paper

More papers in William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan Stephen M. Ross Business School
Contact information at EDIRC.
Series data maintained by Patricia Loh ().