IDEAS home Printed from https://ideas.repec.org/a/pes/ierequ/v15y2020i1p87-105.html
   My bibliography  Save this article

Debt as a financial risk factor in SMEs in the Czech Republic

Author

Listed:
  • Jan Kramolis

    (Tomas Bata University in Zlin, Czech Republic)

  • Kamil Dobes

    (Tomas Bata University in Zlin, Czech Republic)

Abstract

Research background: The approach is based on theoretical sources and completed studies on business debt, debt level and repayment awareness and how this issue relates to SMEs in the Czech Republic. Purpose of the article: The main purpose of this paper is to examine the attitude of SMEs towards the issue of company debt and its position within the economy. This attitude is an inherent part of the company´s risk management. Methods: Three researched issues (How strongly is company debt perceived as a financial risk factor; Does the company consider debt to be a serious matter in their business; What measures does the company take to reduce risk) supported by hypotheses, which verified the thesis, were statistically tested. Finding & Value added: Practical implications confirm the thesis that there is a belief that SMEs do not consider debt to be a critical factor of business risk and do not associate it directly with the major risk of business failure. SMEs do not view debt negatively and do not directly link debt to the risk of failure. Consequently, companies consider the risk of indebtedness as relatively insignificant. Their approach to indebtedness is therefore generally passive and they also believe that it will not jeopardize their business, and they will always somehow manage to solve it through insurance, risk avoidance and through creation of financial reserves.

Suggested Citation

  • Jan Kramolis & Kamil Dobes, 2020. "Debt as a financial risk factor in SMEs in the Czech Republic," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 15(1), pages 87-105, March.
    • Handle: RePEc:pes:ierequ:v:15:y:2020:i:1:p:87-105
    DOI: 10.24136/eq.2020.005
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.24136/eq.2020.005
    Download Restriction: no
    File URL: https://libkey.io/10.24136/eq.2020.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    risk management; debt awareness; company debt; indebtedness; debt repayment; SMEs;
    All these keywords.

    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pes:ierequ:v:15:y:2020:i:1:p:87-105. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Adam P. Balcerzak (email available below). General contact details of provider: https://edirc.repec.org/data/ibgtopl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.