Intellectual Entrepreneurship and Credit Risk Assessment: The Polish Experience

Abstract

This paper analyses and ascertains the use of intellectual capital (IC) concepts in the process of credit risk assessment. Traditionally, only financial measures were incorporated in the credit risk assessment. In the knowledge-based economy, financial statements no longer provide sufficient information about a company's value. Intellectual entrepreneurs, by engaging human capital, embedded in them in an intellectual venture develop an intellectual product. Because of this non-material nature of the main resources in many small and medium enterprises (SMEs), the industrial, physical collateral model is difficult to apply. Therefore, the question this paper tries to address is: Are credit analysts dealing with SMEs aware of the immaterial part of economy, and if so, do they use such information in their credit decisions?

The analysis shows that the use of non-financial information is limited. However, the analysts perceive information about intellectual resources relevant for their job, and point out that the current credit risk assessment procedures do not allow for the use of such information. The research results reveal that there is a space to consider intellectual capital measures when assessing credit risk. Therefore, it might be useful to develop a framework of reporting immaterial resources to assure more accurate credit decisions, and this paper delivers some empirical evidence in that yet unexplored field.

Keywords: Credit risk assessment, Intellectual capital, SME

JEL Classification: M41, M13, G33