Abstract
Small- and medium-sized enterprises (SMEs) are major contributors to most western economies. They are often supported by government policies, and in the UK the government encourages banks to lend to them. It is generally believed that the credit crunch has had an impact on the performance of SMEs. This study looks at the impact of the crunch using large samples from 2007 through to 2010. It looks at performance by region, age and industrial sector (SIC code). It then proceeds to explore the modelling of default over the years, with a focus on young businesses. It was found that there is a degree of stability within the models, though the level of default varies across years. Young businesses, as has been found before, are shown to be more vulnerable.
Similar content being viewed by others
References
Altman EI, Sabato G and Wilson N (2010). The value of non-financial information in SME risk management. The Journal of Credit Risk 6 (2): 1–33.
BCBS (2006). Basel II: International Convergence of Capital Measurement and Capital Standards: A Revised Framework—Comprehensive Version. Bank for International Settlements: Basel, Switzerland.
BCBS (2010). Basel III: Strengthening the resilience of the banking sector. Bank for International Settlements: Basel, Switzerland.
bdrc Continental (2011). SMEs report reduced demand for external finances, http://www.bdrc-continental.com/media-centre/smes-report-reduced-demand-for-external-finance, accessed 6 February 2012.
Beresford R and Saunders MNK (2005). Professionalization of the business start-up process. Strategic Change 14 (6): 337–347.
Cox DR and Snell EJ (1989). Analysis of Binary Data. Chapman and Hall: London.
HM Treasury (2011). Autumn Statement 2011. Cm8231, London.
Harris CW and Kaiser HF (1964). Oblique factor analytic solutions by orthogonal transformation. Psychometrika 29 (4): 347–362.
Howes G (2008). Economic downturn starts to bite SMEs, http://www.smeweb.com/index.php?view=article&id=678, accessed 27 August 2008.
Independent Commission on Banking (2011). Final Report: Recommendations. Independent Commission on Banking: London.
Lin S-M, Ansell J and Andreeva G (2012). Predicting default of a small business using different definitions of financial distress. Journal of the Operational Research Society 63 (4): 539–548.
Ma Y and Lin S-M (2010). 'Credit crunch' and small- and medium-sized enterprises: Aspects affecting survival. Journal of Financial Services Marketing 14 (4): 290–300.
Ma Y (2011). Modelling credit risk of small and medium sized enterprises using transactional, accounting and market variables. PhD Thesis, The University of Edinburgh.
Nagelkerke NJD (1991). A note on a general definition of the coefficient of determination. Biometrika 78 (3): 691–692.
Orton P (2013). Measuring business failure in small and medium sized enterprises. Credit Scoring & Credit Control XIII Conference, Edinburgh.
Schmiemann M (2009). SMEs were the main drivers of economic growth between 2004 and 2006, Eurostat Statistics in focus 71/2009.
Thomas LC, Edelman DB and Crook JN (2002). Credit Scoring and its Applications. Society for Industrial and Applied Mathematics: Philadelphia, PA.
Wilson N (2009). Insolvency increase of 25% suggest recovery will start with ‘W’, http://business.leeds.ac.uk/news-events/item/articles/2009/August/insolvency-increase-of-25-suggests-recovery-will-start-with-a-w/, accessed 19 August 2009.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Orton, P., Ansell, J. & Andreeva, G. Exploring the performance of small- and medium-sized enterprises through the credit crunch. J Oper Res Soc 66, 657–663 (2015). https://doi.org/10.1057/jors.2014.34
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1057/jors.2014.34