Pro-Cyclicality Of Small And Medium Enterprise (Sme) Loans According To Financing Type Based On Purpose: Evidence From Korean Banks
An empirical analysis is conducted on the pro-cyclicality of SME loans based on purpose, which has not been examined in previous research. In this study, the purpose of SME loans is divided into four types: total SME loans, long-term loans for investment in equipment, long-term loans for R&D...
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| Format: | Article |
| Language: | English |
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Asian Academy of Management (AAM)
2016
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| Online Access: | http://eprints.usm.my/37212/ http://eprints.usm.my/37212/1/aamjaf12022016_2.pdf |
| _version_ | 1848878130115117056 |
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| author | Ji , Yong Seo |
| author_facet | Ji , Yong Seo |
| author_sort | Ji , Yong Seo |
| building | USM Institutional Repository |
| collection | Online Access |
| description | An empirical analysis is conducted on the pro-cyclicality of SME loans based on purpose,
which has not been examined in previous research. In this study, the purpose of SME loans
is divided into four types: total SME loans, long-term loans for investment in equipment,
long-term loans for R&D investment, and short-term loans for working capital. The aim
of the study is to determine whether pro-cyclicality exists in the four types of loans. In
particular, it is expected that because of the high-risk weight considered in estimating
credit risk, the number of long-term loans may have decreased in the economic distress
experienced since 2006, when the Basel II accord came into effect. At that time, most banks
adopted the advanced internal rating approach to calculate borrowers' credit risks. This
study is based on the assumption that the risk weight of long-term loans is different from
that of short-term loans. The GMM model is adopted to test the pro-cyclicality of long-term
and short-term loans. The test results showed signifcant pro-cyclicality in long-term loans
for investment in equipment and R&D. Second, there was no pro-cyclicality in short-term
loans for purchasing raw materials. Third, the fnancial characteristics affecting the lending
behaviour of banks were indicators of proftability and fnancial soundness of credit. Based
on the results, effective policies are recommended, such as credit enhancement through
credit guarantees, in order to alleviate the effects of pro-cyclicality on long-term loans |
| first_indexed | 2025-11-15T17:26:26Z |
| format | Article |
| id | usm-37212 |
| institution | Universiti Sains Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T17:26:26Z |
| publishDate | 2016 |
| publisher | Asian Academy of Management (AAM) |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | usm-372122017-10-20T00:53:01Z http://eprints.usm.my/37212/ Pro-Cyclicality Of Small And Medium Enterprise (Sme) Loans According To Financing Type Based On Purpose: Evidence From Korean Banks Ji , Yong Seo HD28-70 Management. Industrial Management An empirical analysis is conducted on the pro-cyclicality of SME loans based on purpose, which has not been examined in previous research. In this study, the purpose of SME loans is divided into four types: total SME loans, long-term loans for investment in equipment, long-term loans for R&D investment, and short-term loans for working capital. The aim of the study is to determine whether pro-cyclicality exists in the four types of loans. In particular, it is expected that because of the high-risk weight considered in estimating credit risk, the number of long-term loans may have decreased in the economic distress experienced since 2006, when the Basel II accord came into effect. At that time, most banks adopted the advanced internal rating approach to calculate borrowers' credit risks. This study is based on the assumption that the risk weight of long-term loans is different from that of short-term loans. The GMM model is adopted to test the pro-cyclicality of long-term and short-term loans. The test results showed signifcant pro-cyclicality in long-term loans for investment in equipment and R&D. Second, there was no pro-cyclicality in short-term loans for purchasing raw materials. Third, the fnancial characteristics affecting the lending behaviour of banks were indicators of proftability and fnancial soundness of credit. Based on the results, effective policies are recommended, such as credit enhancement through credit guarantees, in order to alleviate the effects of pro-cyclicality on long-term loans Asian Academy of Management (AAM) 2016 Article PeerReviewed application/pdf en http://eprints.usm.my/37212/1/aamjaf12022016_2.pdf Ji , Yong Seo (2016) Pro-Cyclicality Of Small And Medium Enterprise (Sme) Loans According To Financing Type Based On Purpose: Evidence From Korean Banks. Asian Academy of Management Journal of Accounting and Finance, 12 (2). pp. 1-14. ISSN 1823-4992 http://web.usm.my/journal/aamjaf/aamjaf12022016/aamjaf12022016_2.pdf |
| spellingShingle | HD28-70 Management. Industrial Management Ji , Yong Seo Pro-Cyclicality Of Small And Medium Enterprise (Sme) Loans According To Financing Type Based On Purpose: Evidence From Korean Banks |
| title | Pro-Cyclicality Of Small And Medium
Enterprise (Sme) Loans According
To Financing Type Based On Purpose:
Evidence From Korean Banks |
| title_full | Pro-Cyclicality Of Small And Medium
Enterprise (Sme) Loans According
To Financing Type Based On Purpose:
Evidence From Korean Banks |
| title_fullStr | Pro-Cyclicality Of Small And Medium
Enterprise (Sme) Loans According
To Financing Type Based On Purpose:
Evidence From Korean Banks |
| title_full_unstemmed | Pro-Cyclicality Of Small And Medium
Enterprise (Sme) Loans According
To Financing Type Based On Purpose:
Evidence From Korean Banks |
| title_short | Pro-Cyclicality Of Small And Medium
Enterprise (Sme) Loans According
To Financing Type Based On Purpose:
Evidence From Korean Banks |
| title_sort | pro-cyclicality of small and medium
enterprise (sme) loans according
to financing type based on purpose:
evidence from korean banks |
| topic | HD28-70 Management. Industrial Management |
| url | http://eprints.usm.my/37212/ http://eprints.usm.my/37212/ http://eprints.usm.my/37212/1/aamjaf12022016_2.pdf |