The Effects of Behavioral Factors on the Creditworthiness of Small-Scale Enterprises

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Author(s): Dmitry Shevchenko (Southern Federal University, Russia)and Ellah Igoche Godwin (Nürtingen-Geislingen University, Germany)
Copyright: 2021
Pages: 15
Source title: Research Anthology on Small Business Strategies for Success and Survival
Source Author(s)/Editor(s): Information Resources Management Association (USA)
DOI: 10.4018/978-1-7998-9155-0.ch018

Keywords: Business & Management / Business & Organizational Research / Business Science Reference / Small and Medium Enterprises

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Abstract

This chapter uses the relationship between behavioral factors and the creditworthiness of small-scale enterprises to increase access of SMEs to credit facilities. The inability of several small businesses to secure loans cannot be overemphasized. Heuristics affecting entrepreneurs are explained in this chapter, and a regression model showing the dependence of creditworthiness on behavioral factors is proposed. If banks consider using psychometric tools in testing for creditworthiness of small-scale entrepreneurs, access to credit facilities will be significantly increased and businesses will flourish. Regressesion models such as the one explained in this chapter may be imbedded in psychometric tools to enhance creditworthiness testing and improve the quality of loans that banks give.

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The Effects of Behavioral Factors on the Creditworthiness of Small-Scale Enterprises

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