Association between Default Behaviors of SMEs and the Credit Facets of SMEs Owners

Abstract

This study attempts examines relationship between default behaviors of SMEs and the credit facets of their owners. Identifying and measuring credit risk of SMEs should be different from that of large firms, for SMEs appear to be influenced by their owners more directly and significantly, so that a more appropriate and effective way of credit management of SMEs could be applied in practice. This study implement an empirical study of logistic regression analysis with repeat sampling data after segregating the owners' characteristics data into variables of basic aspects, credit capacity aspects and credit will aspects. The result reveals that variables reflected credit capacity aspects share more significant relationship with the SMEs' credit default behavior. It indicates that credit will variables and personal credit history have closest relationship with enterprises' default probability and the proportion of overdue loans are the extreme significant variables which are valuable indicators in default risk estimate model.

Keywords: SMEs, owners' credit aspects, credit risk