Screening Creditworthiness of SME's: The Case of Small Business Assistance in Turkey
20 Pages Posted: 19 Jun 2015
There are 2 versions of this paper
Screening Creditworthiness of SME's: The Case of Small Business Assistance in Turkey
Date Written: June 17, 2015
Abstract
In this paper we estimate creditworthiness of small and medium-sized enterprises (SMEs) that receive financial and non-financial incentives from the small business development administration (KOSGEB) in Turkey. Assessing creditworthiness of SMEs to qualify for government support remains a concern since standard methods based on financial information on firms would be inadequate due to lack of transparent financial information. Such businesses apply for government support because they would not qualify for funding from financial institutions. To assess the creditworthiness of these businesses other firm-level data is essential. A logit model is used to estimate riskiness of SMEs including non-financial data obtained from the business survey obtained by KOSGEB. We find that efficient and internationally competitive SMEs are unlikely to default. Firms with high creditworthiness are also managed by owners and focus on their core businesses.
Keywords: Risk; creditworthiness; credit risk; default; SME; logit
JEL Classification: G21, G33
Suggested Citation: Suggested Citation