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Defaulting alone: SME owner numbers and credit risk in Hungary

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  • Csaba Burger

Abstract

Ownership structures in small- and medium-sized companies (SMEs) significantly influence the dynamics of corporate governance. In SMEs, owners are often managers themselves, hence, the way they work together has implications for firm performance, including its credit risk. This study investigates the relationship between the number of owners and the credit default probability of SMEs, using data from the National Credit Registry for the period between 2007 and 2019 in Hungary. The completeness of the dataset lends significance to the results. The paper shows that whereby micro-enterprises with one owner only can have twice as high credit default probability as micro firms with four owners, this relationship gradually diminishes with increasing firm size. Changes to owner numbers raise credit risk in the initial years immediately after the change. In the long run, this impact converges to an overall decrease in default probabilities, meaning that surviving firms end up being managed better.

Suggested Citation

  • Csaba Burger, 2026. "Defaulting alone: SME owner numbers and credit risk in Hungary," Journal of Small Business Management, Taylor & Francis Journals, vol. 64(2), pages 781-807, March.
    • Handle: RePEc:taf:ujbmxx:v:64:y:2026:i:2:p:781-807
    DOI: 10.1080/00472778.2025.2502090
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