The Determinants of Credit Default on Portuguese Start-Up Firms: .An Econometric model
In this paper we investigate the behaviour of credit default in start-up companies. Using a logit regression technique on a panel data of 1430 start-ups and considering a tracking period of three years, we tested the impact on the probability of occurrence of the first credit event in financing agreements due to variables grouped into three categories: financial capital, human capital and industry dynamics. We concluded from a financial point of view, that the support provided by partners in the financing of the company’s activity, the intensity of use of assets under management and reduced debt pay-back periods, were decisive in mitigating risk of default. In addition we found that the occurrence of a credit event will only be as limited as higher the quality of human capital held by the promoter of the project in terms of educational background and management experience.
|Date of creation:||Apr 2014|
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- Godbillon-Camus, Brigitte & Godlewski, Christophe, 2005. "Credit risk management in banks: Hard information, soft Information and manipulation," MPRA Paper 1873, University Library of Munich, Germany.
- Edward Altman & Gabriele Sabato, 2005. "Effects of the New Basel Capital Accord on Bank Capital Requirements for SMEs," Journal of Financial Services Research, Springer;Western Finance Association, vol. 28(1), pages 15-42, October.
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- Edward I. Altman & Gabriele Sabato, 2007. "Modelling Credit Risk for SMEs: Evidence from the U.S. Market," Abacus, Accounting Foundation, University of Sydney, vol. 43(3), pages 332-357.
- Hakenes, Hendrik, 2004.
"Banks as delegated risk managers,"
Journal of Banking & Finance,
Elsevier, vol. 28(10), pages 2399-2426, October.
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