Title: Borrower characteristics and loan performance: evidence from micro and small Greek firms

Authors: Vasileios Giannopoulos; Eleftherios Aggelopoulos; Antonios Georgopoulos

Addresses: Department of Accounting and Finance, University of the Peloponnese, University Campus, 24100, Antikalamos, Kalamata, Greece ' Department of Business Administration, University of Patras, University Campus, 26504, Rio, Patras, Greece ' Department of Business Administration, University of Patras, University Campus, 26504, Rio, Patras, Greece

Abstract: Using a unique dataset of 3,294 micro and small enterprise loans granted before the recession by one of the four systemic banks in Greece, this study identifies diverse borrower-specific characteristics of these loans that transformed into non-performing loans (NPLs) during the recession. Also, we capture how their impact on NPLs changes as recession escalates. More detailed, we find that homeownership, the bank deposit relationship, the existence of own facilities, the business equipment lending purpose, and the cash loan collateral are crucial factors for NPL avoidance in recession years. In contrast, high levels of loan to turnover ratio and the age of the firm's owner seem to increase substantially the delinquency risk. The paper provides originality as it explicitly utilises primary micro-specific information substantially differing from the related literature that utilises aggregated, macroeconomic data, with important implications for policymakers and bank staff regarding lending and repayment policies.

Keywords: non-performing loans; NPLs; borrower-specific characteristics; micro and small enterprises; MSEs; Greece.

DOI: 10.1504/IJBAAF.2022.10045707

International Journal of Banking, Accounting and Finance, 2022 Vol.13 No.1, pp.1 - 31

Received: 07 Feb 2020
Accepted: 28 Nov 2020

Published online: 18 Mar 2022 *

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