les cahiers du mecas
Volume 20, Numéro 1, Pages 284-300
2024-06-04
Factors Influencing Credit Decisions For Lending To Smes In Algerian Banking Practices: Principal Components And Theoretical Insights
Authors : Hadri Khadidja .
Abstract
This study explores the application of information asymmetry theory within the economic domain, examining its relevance and implications for credit demand among SMEs in the Algerian banking sector. By reviewing literature on information asymmetry and related theories, We focus on key concepts such as adverse selection, signaling, collateral, and screening. Our analysis identifies three principal among thirteen major components influencing credit decisions for lending SMEs. These components together explain a substantial part of the variance in credit practices, offering insights into the critical factors that influence credit decision-making. Our findings highlight the importance of guarantee demands, project profitability assessments, and applicant preparedness in shaping credit policies, thereby providing a clearer understanding of the dynamics governing credit provision to SMEs in Algeria. This research aims to inform future financial strategies and policy-making in the banking sector.
Keywords
Information Asymmetry ; Credit Demand ; SMEs ; Algerian Banking Sector ; Principal Component Analysis
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