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

Kód výsledku v 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>

Výsledek na webu

<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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Jazyk výsledku

angličtina

Název v původním jazyce

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

Popis výsledku v původním jazyce

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.

Název v anglickém jazyce

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

Popis výsledku anglicky

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.

Druh

J_imp - Článek v periodiku v databázi Web of Science

CEP obor

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OECD FORD obor

50200 - Economics and Business

Projekt

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Návaznosti

V - Vyzkumna aktivita podporovana z jinych verejnych zdroju

Rok uplatnění

2023

Kód důvěrnosti údajů

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

Název periodika

SOUTH EAST EUROPEAN JOURNAL OF ECONOMICS AND BUSINESS

ISSN

1840-118X

e-ISSN

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Svazek periodika

18

Číslo periodika v rámci svazku

2

Stát vydavatele periodika

BA - Bosna a Hercegovina

Počet stran výsledku

14

Strana od-do

49-62

Kód UT WoS článku

001154683500003

EID výsledku v databázi Scopus

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