Abstract
This research seeks the effect of behavioural and non-behavioural factors of SME’s owners and their business characteristic on the financing decisions. Moreover, this research categorized SMEs owners based on their behavioural aspects on establishing a behavioural mapping in SMEs industry. The sample of this research is the informal SMEs owners in Surakarta, Central Java, Indonesia. In investigating the relationship of the independent variable on financial decision making, this research employed the hierarchical linear multiple regression model (HLMR) and multiple logistic regression (LR). Furthermore, this research employed cluster analysis for building a behavioural mapping in SMEs industry. This study discovered a significant effect of behavioural aspects of SME’s owners on the financing decisions, which is, instead of having significant enforcement on the financing decisions, the non-behavioural aspects were more likely impacted on the SMEs owners’ investment decisions. The finding shows that there are three significant groups of SMEs owners in the Surakarta region. The result of this research gives key insights, mainly to the involved stakeholder to keep the sustainability of the SMEs industry.
Highlights
The issues of financial decisions alleviate attractively as well deserve significant attention from many scholars, beside the dominant issue concerning inconsistencies result from classical theory of financial decisions
This paper presents a literature review of several previous studies relates to the identified factors of both financing decisions and investment decisions
As mentioned in the previous part, this research proposed the non-behavioural aspects as a determinant of financing and investment decisions in SMEs industry
Summary
The issues of financial decisions alleviate attractively as well deserve significant attention from many scholars, beside the dominant issue concerning inconsistencies result from classical theory of financial decisions. Beside of that, Kon and Storey (2003) proposed the other unique characteristic of SMEs industry They asserted that SME’s owners turn to be fear and not confident in handling the amount of funds from FIs. So even though financial institutions strive to raise the supply of funds to micro-business sector, the SME’s owners will not necessarily grab the funds all at once. There are too many researches focus on the supply side, which concerning of how FIs avert the likeliness of higher credit default (Chijoriga, 2011; Alali & Romero, 2013; Osei-Assibey & Asenso, 2015; Vithessonthi, 2016) It is hampered, there are some researches could be contrived as a reference, for instance, Rao et al (2019) which conducted an attention of several factors that encouraged SMEs owners in financing decisions. While in the sixth part, this paper will discuss the implications of the results and the possibilities that will be carried out in future research
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