Developing A Predictive Model for Small Business Loan Default
Purpose: Governments assume responsibility for supporting SBs, including financial assistance. In South Africa, legislative measures and strategic initiatives have been established to bolster SBs, including the creation of funding agencies. These agencies intervene to enhance SB growth, job creation...
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| Format: | Article |
| Language: | English |
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CSRC Publishing
2024-12-01
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| Series: | Journal of Accounting and Finance in Emerging Economies |
| Subjects: | |
| Online Access: | https://www.publishing.globalcsrc.org/ojs/index.php/jafee/article/view/3238 |
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| _version_ | 1850265266098798592 |
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| author | Refiloe Gladys Benedict O Stumke Veruschka Pelser Carstens |
| author_facet | Refiloe Gladys Benedict O Stumke Veruschka Pelser Carstens |
| author_sort | Refiloe Gladys Benedict |
| collection | DOAJ |
| description | Purpose: Governments assume responsibility for supporting SBs, including financial assistance. In South Africa, legislative measures and strategic initiatives have been established to bolster SBs, including the creation of funding agencies. These agencies intervene to enhance SB growth, job creation, poverty reduction, increased tax revenue and overall economic participation. This inherent risk results in ongoing losses and suboptimal returns on government investments, potentially wasting taxpayer funds. This paper proposes a model aimed at proactively increasing loan repayment probabilities. The study investigates SB characteristics that can pre-emptively mitigate loan repayment failures to government agencies.
Design/Methodology/Approach: Employing a quantitative approach, a purposive sample of 114 SBs was analyzed using Stata, a versatile statistical software package.
Findings: The findings highlight factors that may predict SBs' failure to repay loans from government agencies. These factors include risk taking, innovativeness, pro-activeness, customer relations, interpersonal relations, business planning, record keeping, financial management, market orientation, education and training, business experience and age and gender.
Implications/Originality/Value: The study recommends that loan agreements should incorporate covenants that stipulate a required level of owner involvement in the business, as this serves as a demonstration of the owner's commitment.
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| format | Article |
| id | doaj-art-15e7b4c8652d422d8a5cb7e582b16d2d |
| institution | OA Journals |
| issn | 2519-0318 2518-8488 |
| language | English |
| publishDate | 2024-12-01 |
| publisher | CSRC Publishing |
| record_format | Article |
| series | Journal of Accounting and Finance in Emerging Economies |
| spelling | doaj-art-15e7b4c8652d422d8a5cb7e582b16d2d2025-08-20T01:54:30ZengCSRC PublishingJournal of Accounting and Finance in Emerging Economies2519-03182518-84882024-12-0110410.26710/jafee.v10i4.3238Developing A Predictive Model for Small Business Loan DefaultRefiloe Gladys Benedict0O Stumke1Veruschka Pelser Carstens2University of Johannesburg, City of Johannesburg, South Africa Durban University of Technology, City of eThekwini, South AfricaNorth-West University, City of Mafikeng, South Africa Purpose: Governments assume responsibility for supporting SBs, including financial assistance. In South Africa, legislative measures and strategic initiatives have been established to bolster SBs, including the creation of funding agencies. These agencies intervene to enhance SB growth, job creation, poverty reduction, increased tax revenue and overall economic participation. This inherent risk results in ongoing losses and suboptimal returns on government investments, potentially wasting taxpayer funds. This paper proposes a model aimed at proactively increasing loan repayment probabilities. The study investigates SB characteristics that can pre-emptively mitigate loan repayment failures to government agencies. Design/Methodology/Approach: Employing a quantitative approach, a purposive sample of 114 SBs was analyzed using Stata, a versatile statistical software package. Findings: The findings highlight factors that may predict SBs' failure to repay loans from government agencies. These factors include risk taking, innovativeness, pro-activeness, customer relations, interpersonal relations, business planning, record keeping, financial management, market orientation, education and training, business experience and age and gender. Implications/Originality/Value: The study recommends that loan agreements should incorporate covenants that stipulate a required level of owner involvement in the business, as this serves as a demonstration of the owner's commitment. https://www.publishing.globalcsrc.org/ojs/index.php/jafee/article/view/3238BorrowingFunding AgenciesGovernment LoanLoan Repayment FailureSmall Business (SBs) |
| spellingShingle | Refiloe Gladys Benedict O Stumke Veruschka Pelser Carstens Developing A Predictive Model for Small Business Loan Default Journal of Accounting and Finance in Emerging Economies Borrowing Funding Agencies Government Loan Loan Repayment Failure Small Business (SBs) |
| title | Developing A Predictive Model for Small Business Loan Default |
| title_full | Developing A Predictive Model for Small Business Loan Default |
| title_fullStr | Developing A Predictive Model for Small Business Loan Default |
| title_full_unstemmed | Developing A Predictive Model for Small Business Loan Default |
| title_short | Developing A Predictive Model for Small Business Loan Default |
| title_sort | developing a predictive model for small business loan default |
| topic | Borrowing Funding Agencies Government Loan Loan Repayment Failure Small Business (SBs) |
| url | https://www.publishing.globalcsrc.org/ojs/index.php/jafee/article/view/3238 |
| work_keys_str_mv | AT refiloegladysbenedict developingapredictivemodelforsmallbusinessloandefault AT ostumke developingapredictivemodelforsmallbusinessloandefault AT veruschkapelsercarstens developingapredictivemodelforsmallbusinessloandefault |