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    Credit Risk Reduction Effect on Small and Medium-sized Enterprise Finance Through the use of Bank Account Information

    Nemoto, Naoko; Yoshino, Naoyuki; Okubo, Yutaka; Inaba, Daimei; Yanagisawa, Kentaro | August 2018
    Abstract
    This paper verifies the impact of bank account information, such as information on deposits and withdrawals, that is not necessarily fully accounted for in conventional internal ratings and that can affect the accuracy of the default predictions of small and medium-sized enterprises (SMEs). The analysis demonstrates that the accuracy of default predictions improves when a model based on bank account information is used in addition to the default prediction model based on traditional financial information. The analysis also shows that the degree of improvement increases when the size of the company is small. For small companies, the quality of financial data is generally assumed to be low, but the bank account information model can complement the incomplete data. In addition, for small firms, the bank account information model shows better default prediction capability compared to the financial model, which implies the possibility that banks could extend loans even if only the bank account information is available. The correlation coefficients of the financial model and the bank account model are higher than 50% but not very high, suggesting that these models evaluate borrowers from different perspectives. This study suggests the possibility of analyzing credit risk more easily without past financial information, especially for small enterprises. If the bank account information model is utilized, banks can reduce credit costs and loan review times and costs, which will make SME financing more efficient and smooth. The empirical analysis in this paper focuses on SMEs in Japan, but the results can also be applied to other countries, particularly emerging countries in Asia.
    Citation
    Nemoto, Naoko; Yoshino, Naoyuki; Okubo, Yutaka; Inaba, Daimei; Yanagisawa, Kentaro. 2018. Credit Risk Reduction Effect on Small and Medium-sized Enterprise Finance Through the use of Bank Account Information. © Asian Development Bank Institute. http://hdl.handle.net/11540/8636.
    Keywords
    Risk Financing
    Urban Development Finance
    Trade Finance
    Small Business Finance
    Rural Finance
    Roundtable on International Trade and Finance
    Regional Development Finance
    Public Service Finance
    Public Finance
    Project Finance
    Private Finance
    Nonbank Financing
    Non-Bank Financial Institutions
    Municipal Finance
    Local Government Finance
    Local Currency Financing
    Limited Resource Financing
    International Financial Institutions
    Infrastructure Financing
    Industrial Finance
    Government Financial Institutions
    Government Finance
    Financing of Infrastructure
    Financial Sector Development
    Financial Regulation
    Urbanization
    Urban Services
    Urban Projects
    Urban Problems
    Urban Poverty
    Urban Policy
    Urban Planning
    Urban Infrastructure
    Urban Health
    Urban Government
    Urban Economic Development
    Urban Development Finance
    Urban Development
    Urban Conditions
    Urban Communities
    Urban Population
    Taxation
    Public Accounting
    National Budget
    Municipal Bonds
    Local Government
    Local Taxes
    International Monetary Relations
    International Financial Market
    International Banking
    Central Banks
    Business Financing
    Capital Resources
    Budgetary Policy
    Capital Needs
    Corporate Divestiture
    Capital Instruments
    Pension Funds
    Insurance Companies
    Banks
    Portfolio Management
    Fiscal Administration
    Economics of Education
    Development Banks
    Urban Plans
    Urbanism
    Urban agriculture
    Economic Development
    Rural Urban Migration
    Cities
    Migration
    Use tax
    Taxing power
    State of taxation
    Tax-sales
    Tax revenue estimating
    Tax planning
    Spendings tax
    Special assessments
    Tax administration and procedure
    Sales tax
    Real property and taxation
    Progressive taxation
    Effect of taxation on land use
    Effect of taxation on labor supply
    Intergovernmental tax relations
    Inheritance and transfer tax
    Energy tax
    Local government
    Urban renewal
    Urban housing
    Urban sociology
    Transit systems
    Rapid transit
    Public transit
    Mass transit
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    Citable URI
    http://hdl.handle.net/11540/8636
    Metadata
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    Author
    Nemoto, Naoko
    Yoshino, Naoyuki
    Okubo, Yutaka
    Inaba, Daimei
    Yanagisawa, Kentaro
    Theme
    Finance
    Urban
    Labor Migration
    Small Medium Business
     
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise
    Copyright 2016-2021 Asian Development Bank Institute, except as explicitly marked otherwise