Credit Risk Elements for Small and Medium-Sized Enterprises: The Case of Spain

Purpose: The aim of this paper is, firstly, to identify the elements banks consider when assessing the credit risk of SMEs and, subsequently, to propose actions aimed at helping them to transmit reliable information on their credit quality. Design/methodology/approach: In this study, a dual methodology was used, both of which are qualitative and complementary, at first, in-depth interviews with specialists and, subsequently, the Delphi method. A panel of expert representatives of the Spanish banking system were selected. Then, firstly, personal interviews were carried out. Subsequently, once the information has been collected and analysed, the Delphi method was applied. Findings: Results show that the experts unanimously consider that SMEs need to provide a balance sheet and profit and loss account. In addition, there is a broad consensus in the assessment of the importance of the audit report and corporation tax, while the documents relating to VAT settlement and the declaration of transactions with third parties is also important. Depending on the profile of the experts, it can be seen that, in general, the importance attached to the request for this type of documentation by the group of risk analysts is slightly lower than in the group of branch managers. Practical implications: Therefore, the contribution of this paper to the existing literature consists, on the one hand, of the application of a different approach, from the banks’ perspective, and, on the other hand, of the identification of the type of information that banks consider essential when analysing SMEs’ applications for financing, as well as providing recommendations to SMEs to improve the conditions for access to bank financing. Originality value: The proposed methodology would improve the flow of information between companies and institutions and help to reduce the problem of information opacity, which, can condition access to bank financing.