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Effect of perceived default risk and accounting information quality on the decision to grant credit to SMEs

Estefanía Palazuelos (), Ángel Herrero Crespo () and Javier Montoya del Corte ()
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Estefanía Palazuelos: University of Cantabria
Ángel Herrero Crespo: University of Cantabria
Javier Montoya del Corte: University of Cantabria

Risk Management, 2018, vol. 20, issue 2, 121-141

Abstract: Abstract The present study analyses the influence that perceived default risk and accounting information quality have on the process of credit granting to small- and medium-sized enterprises (SMEs). Empirical evidence was obtained from a survey of 471 bank loan officers in Spain, in which they were asked to answer questions relating to audited and not-audited firms. Through a structural equations modeling (SEM) approach, the results confirm that the likelihood that the loan officers are more willing to provide access to credit to SMEs, and to do so in more favourable conditions, is negatively influenced by perceived default risk and positively influenced by the general perception about accounting information quality. Besides, we find that information quality is an antecedent of perceived risk, so that the latter becomes the central element of the research model. Additionally, the perceptions of the decision-makers regarding all the analysed variables are better for the audited SMEs than for the unaudited ones.

Keywords: Perceived risk; Information quality; Credit access; Credit conditions; External audit; SMEs (search for similar items in EconPapers)
Date: 2018
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