Change search
ReferencesLink to record
Permanent link

Direct link
How do Banks Manage the Credit Assessment to Small Businesses and What Is the Effect of Basel III?: An implementation of smaller and larger banks in Sweden
Jönköping University, Jönköping International Business School, JIBS, Business Administration.
Jönköping University, Jönköping International Business School, JIBS, Business Administration.
2012 (English)Independent thesis Advanced level (degree of Master (One Year)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

Background: Small businesses are considered as a valuable source for the society and the economic growth and bank loan is the main source of finance for them. Small businesses are commonly seen as riskier than larger businesses it is thus noteworthy to examine banks’ credit assessment for small businesses. The implementation of the Basel III Accord will start in 2013 with the aim to generate further protection of financial stability and promote sustainable economic growth, and the main idea underlying Basel III is to increase the capital basis of banks.

Purpose: The purpose of this study is to describe how larger and smaller banks in Sweden are managing credit assessment of small businesses, and if this process differs according to the size of the bank. The authors further want to investigate how expectations of new capital regulations, in form of Basel III, affect the credit assessment and if it is affecting the ability of small businesses to receive loans.

Method: In order to meet the purpose of the thesis a mixed model approach is used. The authors conducted semi-structured interviews with representatives from three smaller and three larger banks. Additional, statistics were computed in order to examine the economic state of the Swedish market, where also an archival research with 10 allocated banks operating with corporate services was executed.

Conclusions: The banks have a well-developed credit process where building a mutual trust relationship with the customer is crucial. If the lender has a good relationship with the customer, it will ease the collection of credible information and thus enhance the process of making right decision. The research examined minor differences between smaller and larger banks in their credit assessment. Currently, the banks do not see any problems with adjusting to the new regulation and thus do not see specific effects for small businesses and their ability to receive loans. The effects that can be identified by the expectations of Basel III are the banks’ concern of charging the right price for the right risk and the demand of holding more capital when lending to businesses. The banks have come a long way on the adjustment to Basel III, which has pros and cons, thus it implies that banks are already charging customers for the effect of the regulations that will not be 100 percent implemented until 2019. The difference that was identified between larger and smaller banks is that larger banks seem to have more established strategies when working on the implementation of Basel III.

Place, publisher, year, edition, pages
2012. , 70 p.
Keyword [en]
Credit risk, Credit Assessment, Basel III, Small Business Finance
National Category
Business Administration
URN: urn:nbn:se:hj:diva-18257OAI: diva2:530681
Subject / course
IHH, Business Administration
Social and Behavioural Science, Law
Available from: 2012-07-06 Created: 2012-06-04 Last updated: 2012-07-06Bibliographically approved

Open Access in DiVA

Banks credit assessment to small businesses(1493 kB)3002 downloads
File information
File name FULLTEXT01.pdfFile size 1493 kBChecksum SHA-512
Type fulltextMimetype application/pdf

By organisation
JIBS, Business Administration
Business Administration

Search outside of DiVA

GoogleGoogle Scholar
Total: 3002 downloads
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

Total: 808 hits
ReferencesLink to record
Permanent link

Direct link