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on Entrepreneurship |
| By: | Paolo Pinotti; Gianmarco Daniele; Marco De Simoni; Domenico Marchetti; Giovanna Marcolongo |
| Abstract: | We show that credit constraints significantly increase the risk that firms are infiltrated by organized crime, defined as the covert involvement of criminal organizations in corporate decision-making. Using confidential data on criminal investigations, credit ratings, and loan histories for the universe of Italian firms, we find that a downgrade to substandard credit status reduces credit availability by 30% over five years and increases the probability of infiltration by 5%, relative to comparable firms. A local randomization design comparing firms just above and below the downgrade threshold confirms this result. The effect is pervasive across sectors and regions, but particularly strong in real estate, where the probability of infiltration rises by 10% following a downgrade. Infiltrated firms also display higher survival rates than other downgraded firms, despite similar declines in employment and revenues. These findings suggest that organized crime can serve as a financial backstop -- sustaining non-viable businesses and potentially redirecting their strategies to serve criminal interests. |
| Keywords: | Organized crime, Firms, Bank Credit |
| JEL: | G32 K42 L25 O17 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:25101 |
| By: | Felipe Aguilar; Roberto Alvarez |
| Abstract: | In this paper, we use data for more than 5, 000 Chilean companies to investigate whether participation in business association increases the probability of R&D investment. Dealing with the endogeneity of participation through a bivariate Probit model with an exclusion variable that captures the trust environment among firms, we find that this probability increases by about 27%. This effect is heterogeneous across firms. Participation increases the probability of R&D investment by 30.8% for SMEs and by 43.9% for those companies with severe financial constraints. Our evidence is consistent with the idea that associativity may help SMEs to close the innovation gap and/or to alleviate financial problems. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:chb:bcchwp:1064 |
| By: | Cheruiyot, Josea K. |
| Abstract: | This paper examines the incidence and determinants of credit rationing and borrower discouragement among Kenyan SMEs using firmlevel data from the 2018 World Bank Enterprise Survey. Only about onequarter of firms report no financing obstacles, while the majority face constraints of varying severity. Younger, informally registered, femaleowned, and unaudited firms are significantly more likely to be constrained, consistent with informational opacity and limited collateral. Credit application patterns indicate extensive selfexclusion: roughly threequarters of SMEs do not apply for loans despite plausible financing needs, citing anticipated rejection, high interest rates, collateral requirements, or other perceived deterrents. Among those who apply, approval rates exceed 90 percent, suggesting that effective rationing arises mainly from preapplication barriers rather than lender denial. These findings indicate that frictions-limited transparency, weak disclosure, and elevated borrower risk perceptions-play a central role in suppressing SME participation in the formal credit market. Policies that expand collateral substitutes, strengthen credit information systems, and support financial reporting could alleviate these frictions and broaden access to credit. |
| Keywords: | SMEs, Credit, Financing Constraints, Discouraged Borrowers, Kenya |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kbawps:340183 |
| By: | Díaz Cachay, Pedro Antonio |
| Abstract: | Family businesses have a prominent presence around the world, constituting 70 – 90% of global firms (Zellweger, 2017). These businesses play an important role in regional economies and employment rates (Shepherd and Zacharakis, 2000). This article explores how exit intentions among small family businesses vary across the North Central Region (NCR) using data from the NCR-STAT: Small Business Survey (Wiatt et al., 2024). The Small Business Survey contains 1, 287 responses from small business owners; however, our analysis focuses only on respondents who identified their firm as a family business, resulting in 494 observations. Chua et al. (1999) describe family businesses as firms in which a defining feature is the intention to transfer ownership and control to the next generation within the family. In this study, survey respondents self-identified whether they considered their small business to be a family business. Our focus is the North Central Region, which consists of the states of Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. Understanding where family businesses are located across the region is an important first step in analyzing their transition decisions. However, location alone does not determine whether these firms are prepared for the future. In the next section, we examine how succession planning varies across family businesses in the North Central Region as an indicator of readiness to transfer the firm to the next generation. |
| Keywords: | Agribusiness, Community/Rural/Urban Development |
| Date: | 2026–04–28 |
| URL: | https://d.repec.org/n?u=RePEc:ags:ncrcrd:397836 |
| By: | Sonja Sperber (WU - Wirtschaftsuniversität Wien [Austria]); Klaus Heine (EM - EMLyon Business School); Glyn Atwal (ESC Dijon Bourgogne, École supérieure de commerce de Dijon-Bourgogne (France, Dijon)) |
| Abstract: | When executed well, purpose can become a transformative force, turning a business into a breakout success. Despite the wave of purpose-driven businesses in recent years, the concept of purpose remains underdeveloped. Purpose is a core component of business models but is difficult to retrofit into large corporations, which makes it especially valuable to understand how SMEs can effectively leverage purpose to differentiate themselves from bigger players. The study follows a constructivist grounded theory approach, using a comparative multiple case study design and qualitative content analysis. A key outcome is a conceptual framework that identifies critical components of brand purpose. The framework shows start-up and SME managers which components are essential to crafting a purpose, to strengthen its clarity, appeal, and motivational power. It supports managers in the process of developing their purpose, integrating it into their business, and illustrates best practices that explain why and how these components can be used to communicate their purpose to both internal and external stakeholders. |
| Keywords: | brand identity, brand purpose, purpose-driven branding, SME |
| Date: | 2026–03–26 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05596567 |
| By: | Wairimu, Salome; Kiragu, Doris |
| Abstract: | Micro, small and medium enterprises (MSMEs) are critical drivers towards the growth of the economy and contribute largely towards poverty eradication and employment. In Kenya, the MSME sector contributes to 40% of GDP, and employs approximately 14.9 million. Yet, this sector continues to experience difficulties in accessing credit from financial institutions. MSMEs' find it difficult to access credit from banks while banks find it difficult to lend to MSMEs due to lack of visibility. Additionally, reliance on informal credit sources in unsustainable. MSME borrowers are often trapped in vicious cycles of indebtedness and predatory lenders hampering firms' long-term performance. As a result, this study seeks to examine the key constraints hindering MSMEs' access to formal financing and their contribution to the financing gap. Similarly, to evaluate policy interventions that can enhance credit availability and bridge the MSME financing gap. The study adopted a logit regression estimation model, with the average marginal effects used to interpret the findings. The results indicate that lenders perceive MSME borrowers as risky and use credit measures like collateral to mitigate these risks. Factors like lack of collateral, guarantors, negative CRB listing exclude MSMEs from access to credit. Therefore, there is need for policies aimed at supporting banks in extending credit to MSMEs' as well as building capacity among the MSMEs in Kenya for their growth and sustainability |
| Keywords: | Capital, Competition, Stability, Panel |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kbawps:340181 |
| By: | Ndwiga, David |
| Abstract: | The paper examines the effects of commercial banks' adoption of Environmental, Social and Governance practices on Micro, Small and Medium-sized Enterprises support in Kenya. The study is underpinned on the growing demand for sustainable financing by entreprises in the wake of need for sustainable businesses. The study focused on commercial banks that have adopted ESG practices and report their sustainability progress. Using panel data analysis study found that environmental, social and governance practices integration significantly increases the number of Micro, Small and Medium-sized Enterprises trained. Conversely, banks' ESG adoption was found to positively but insignificantly affect MSME lending. The results conclude that banks' training to MSMEs is necessary but not sufficient for increased MSME lending. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kbawps:340179 |
| By: | Grakolet Gourene; Jiri Balcar; Lenka J. Filipova; Zuzana B. Schwidrowski |
| JEL: | D22 G21 G32 |
| Date: | 2024–10–17 |
| URL: | https://d.repec.org/n?u=RePEc:rza:ersawp:896 |
| By: | Muli, Anthony; Ndwiga, David; Agung, Raphael; Njoroge, Samantha |
| Abstract: | The study seeks to examine the effects of credit guarantee schemes on Micro, Small and Medium-sized Enterprises (MSME) lending. Specifically, the paper examined the performance of a specified credit guarantee scheme, effect of the credit guarantee scheme on MSME loan default probability and how loan repayment performs across different sectors. The study utilised bank level data for 2, 398 MSMEs under the specified credit guarantee scheme. The study found that the credit guarantee scheme improves MSMEs access to formal credit. Furthermore, low default rate was reported based on firm count. Regarding credit guarantee coverage ratio - default probability nexus, this study established existence of moral hazard effect which is statistically significant. However, across different sectors, short run models find credit guarantee moral hazard sectoral bias, largely elevated in agriculture, building and construction, trade and manufacturing sectors. Additionally, default risk was found to reduce with firm age. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kbawps:340176 |
| By: | Kodongo, Odongo |
| Abstract: | Data from the Central Bank of Kenya show that, in the 12 months to December 2024, the banking sector generated approximately 35.3% of its overall lendingrelated income from the MSME sector, almost half of which was from small and microenterprises (SMEs). During the same period, banks and microfinance banks extended less than 20% of their combined credit to SMEs. This paper explores reasons for the suboptimal lending by banks to SMEs using an analytical framework that draws from the literature and lending practices in different contexts. The major reasons for suboptimal SME lending by banks include perception of higher risks and inadequate institutional arrangements. The paper makes several recommendations at the policy level and at the bank level to address the identified problems. |
| Keywords: | Small and microenterprises, banks, credit, Kenya |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:kbawps:340182 |