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.
Highlights
The availability of bank financing for small and medium-size enterprises (SMEs) is a topic of significant research interest among academics and a crucial issue for policymakers (Berger and Udell, 2006; De la Torre et al, 2010)
This study takes into account the possible effect of external audit because, as a control and supervision element of the information disclosed by companies, it could significantly affect the two perceptual variables included in the proposed research model
The effect of the control variable (Audited versus Not-audited SMEs) was tested through a multi-group analysis, in order to check if the relationships established in the research model were affected by whether the financial statements provided by the SMEs were audited or not. 4.1
Summary
The availability of bank financing for small and medium-size enterprises (SMEs) is a topic of significant research interest among academics and a crucial issue for policymakers (Berger and Udell, 2006; De la Torre et al, 2010). This interest is driven in part by the fact that SMEs play a key role in the creation of wealth and employment of any economy. One of the often-cited main factors that hampers SMEs financing is opaqueness, which accentuates information asymmetries (Berger and Udell, 1998; Berger et al, 2001; Hyytinen and Pajarinen, 2008). “opaqueness” is often referred to the greater difficulties SMEs encounter in transmitting reliable information about their real status and performance, so that it is difficult for lenders to ascertain if firms have the capacity to pay (risk of adverse selection) and/or the willingness to pay (risk of moral hazard) (Hyytinen and Väänänen, 2006)
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