RELATIONSHIP BANKING, COLLATERAL, AND THE ECONOMIC CRISIS AS DETERMINANTS OF CREDIT RISK: AN EMPIRICAL INVESTIGATION OF SMEs

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F75081431%3A_____%2F23%3A00002670" target="_blank" >RIV/75081431:_____/23:00002670 - isvavai.cz</a>

Result on the web

<a href="https://intapi.sciendo.com/pdf/10.2478/jeb-2023-0018" target="_blank" >https://intapi.sciendo.com/pdf/10.2478/jeb-2023-0018</a>

DOI - Digital Object Identifier

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Result language

angličtina

Original language name

RELATIONSHIP BANKING, COLLATERAL, AND THE ECONOMIC CRISIS AS DETERMINANTS OF CREDIT RISK: AN EMPIRICAL INVESTIGATION OF SMEs

Original language description

This study examines the impact of relationship banking and collateral on the probability of firm loan default in Kosovo. Using a sample of 2,320 loan-level data from an individual bank credit register, findings indicate that stronger firm-bank relationships reduce the probability of default, and tighter credit policies regarding higher collateral requirements and interest rates have the opposite effect. Re-specifying the model to control for the banking sector concentration Hirschman-Herfindahl Index (HHI) and the Net Interest Margin (NIM), the firm-bank relationship is no longer statistically significant. Results show that the crisis negatively impacts credit risk, while HHI positively affects the probability of loan default. This evidence suggests that banking relationship matters only in competitive markets. To test the potential interaction effect between relationship banking and collateral, Fairlie's (1999) decomposition technique is deployed. Our results imply that high concentration levels in the banking sector render firm-bank relationships relatively less important. This is of utmost importance for SMEs, banks, and policymakers.

Czech name

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Czech description

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Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

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OECD FORD branch

50200 - Economics and Business

Project

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Continuities

V - Vyzkumna aktivita podporovana z jinych verejnych zdroju

Publication year

2023

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

SOUTH EAST EUROPEAN JOURNAL OF ECONOMICS AND BUSINESS

ISSN

1840-118X

e-ISSN

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Volume of the periodical

18

Issue of the periodical within the volume

2

Country of publishing house

BA - BOSNIA AND HERZEGOVINA

Number of pages

14

Pages from-to

49-62

UT code for WoS article

001154683500003

EID of the result in the Scopus database

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