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Default Rates in the Loan Market for SMEs: Evidence from Slovakia Author info | Abstract | Publisher info | Download info | Related research | Statistics Jarko Fidrmuc ()
Christa Hainz ()
Anton Malesich ()
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Banks entering an emerging market face a lot of uncertainty about the risks involved in lending. We use a unique unbalanced panel of nearly 700 shortterm loans made to SMEs in Slovakia between January 2000 and June 2005. Of the loans granted, on average 6.0 per cent of the firms defaulted. Several probit models and panel probit models show that liquidity and profitability factors are important determinants of SMEs defaults, while debt factors are less robust. However, we find that above average indebtedness significantly increases the probability of default. Moreover, the legal form that determines liability has important incentive effects.
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Paper provided by William Davidson Institute at the University of Michigan Stephen M. Ross Business School in its series William Davidson Institute Working Papers Series with number
wp854.
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Date of creation: 01 Nov 2006Date of revision:
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Keywords: SME ; Credit ; Loan Default ; Mortality Rates ; Incentives ; Probit ; Panel Data ; Other versions of this item:
Find related papers by JEL classification: G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
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Fidrmuc , Jarko & Horváth, Roman & Horváthová, Eva, 2008.
"Corporate Interest Rates and the Financial Accelerator in the Czech Republic ,"
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