What Affects Bank Debt Rejection? Bank lending conditions in UK SMEs
Date: Thursday 10 May
Time: 12pm – 1pm
In this webinar Mingchen Sun will present his recent research on bank lending conditions.
Using the UK Small and Medium Sized Enterprises (SME) Finance Monitor data over 2010-2016, Mingchen’s research explores developments in bank credit market conditions focusing on common causes of bank debt rejections within UK SMEs. Following the global financial crisis the factors affecting rejections remain similar while business overdrafts and term loans show slightly different trends. Mingchen will present evidence that younger, smaller and more innovative SMEs are more likely to be rejected; while partnerships and firms with higher initial credit balance and female owners are more likely to be approved. The research shows that rejection rates over the period under investigation have been broadly similar for micro-firms compared to other SMEs, while start-ups appear to have suffered dire credit conditions, particularly prior to 2014 with little improvement over the most recent years. This is worrying as young start-ups drive innovation and supporting them would boost job creation.
Mingchen’s thesis focuses on the access to bank credit for SMEs concerning credit risk management, banking market conditions and the local environment. Currently, the main interest is to investigate the credit scoring model for SMEs using the firm-level data. Mingchen completed his masters in Financial Engineering and Risk Management at the University of Essex.