The Role of Mutual Guarantee Institutions in the Financial Sustainability of New Family-Owned Small Businesses

Cabrero, Concepción de la Fuente; Castro-Pardo, Mónica de; Sánchez, Rocío González; Sánchez, Pilar Laguna

doi:10.3390/su11226409

Cited by 4 publications

(3 citation statements)

References 53 publications

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“…The authors agree that financial costs play an important role in the preparation for the crisis (de la Fuente‐Cabrero et al, 2019, Driver & Munoz‐Bugarin, 2019). The lack of funding is also presented here as one of the barriers that prevent preparations for the crisis in each study year.…”

Section: Discussionmentioning

confidence: 95%

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Are small businesses better prepared for crises? Czech case

Mikušová

Horváthová

2022

Contingencies & Crisis Mgmt

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Small businesses often suffer from a lack of resources, which in many cases they cite as a reason why they cannot prepare for crises. Increasingly frequent threats may have forced them to rethink their thinking. The aim of this study is to compare data from 2009, 2012, 2019 and 2021 and thus provide the basis for the non/ confirmation of the hypothesis of continuously increasing crisis preparedness in small enterprises. A questionnaire survey was conducted within Czech small businesses in the mentioned years. More than 1000 respondents participated in the research each year. The outputs were statistically processed. Different prevention approach strategies in each year, barriers that complicate preparation and understanding of the not/importance of prevention have been identified. A basic hypothesis could not be confirmed. However, in the context of how highly the importance of crisis preparedness is assessed, actual active prevention is still low. Managers still do not consider crisis preparedness to be part of their competitiveness. The practical benefit of the research is to initiate their reflection on the necessity of crisis prevention. Theoretical contribution is its comparative character over time, allowing to monitor the evolution of the approach of small business managers.

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Section: Discussionmentioning

confidence: 95%

“…Difficult access to finance for small businesses, especially during crisis and recessions, is mentioned in a number of publications (e.g., de la Fuente‐Cabrero et al, 2019). Generally, finance was more readily available to larger and older firms throughout the recession (Cowling et al, 2012).…”

Section: Theoretical Backgroundmentioning

confidence: 99%

Are small businesses better prepared for crises? Czech case

Mikušová

Horváthová

2022

Contingencies & Crisis Mgmt

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“…In particular, the creation of Mutual Guarantee Institutions (MGIs: private guarantee institutions created by beneficiary SMEs) is valuable for policy makers who focus on solutions that help reduce the financial constraint on self-employers and SMEs [25]. MDIs have provided additional guarantees for public loans and, in turn, have contributed to the development of the sustainability of SMEs in European countries [26].…”

Section: Literature Reviewmentioning

confidence: 99%

Empirical Evidence of Risks of Public-Loan Finance: Comparison between Self-Employers and SMEs

2021

Sustainability

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Public financial loans are very complex. However, previous research has largely neglected the effective management of public funds. More specifically, how to maintain the optimal balance between small businesses and loan providers for managing public funds over time remains unclear. Moreover, little is known about how public funds should be managed to increase survival periods, which are directly related to these institutions’ financial stability. This study tests the difference between public fund borrowers and providers from perspectives on their long-term survival and compares survival periods using 499,554 guaranteed loans. The findings show that 85% guarantee ratios and high credit ratings help increase survival periods. The findings also show that individual-based borrowers, such as self-employers, have a strong tendency to survive much longer than SMEs. Finally, our study extends the literature by offering a risk theory perspective on public financial institutions that explains how guarantee ratios and credit ratings affect the survival periods of borrowers, resulting in these institutions’ financial soundness.

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An evolutionary game study on the cooperation behavior of the “government, banks, and guarantee institutions” in financing guarantee for China’s new agricultural entities

Zhang

Zhu²,

Zhang³

et al. 2023

Front. Phys.

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“Government, bank, and guarantee institution” cooperative financing guarantee (hereinafter referred to as the cooperation mechanism) is an important way to alleviate the financing difficulties of China’s new agricultural entities and raise the credit line of bank financing. In order to find an effective way for the improvement of low-level equilibrium in the actual operation of the cooperation mechanism, this study builds a three-party evolutionary game model using the local government, banks, and agricultural guarantee institutions, with incomplete information on all partners of the cooperation mechanism as the study object. This model focuses on the weak activeness, strong dependence, poor cooperation effect, lower credit line of guarantee, and other specific problems. Moreover, this study analyzes the equilibrium solution of this model and extracts the significant factors affecting the positive cooperation behaviors of the three parties (government, banks, and guarantee institutions) in the view of interest realization. Analog simulation is performed to explore the key conditions for truly alleviating the financing risks of new agricultural entities, thus helping improve the operation quality of the cooperation mechanism. According to the study results, the focus of “government, bank, and guarantee institution” cooperation should be shifted from post risk sharing to prior risk identification. Specifically, the government should further share high-quality information affiliated with farmland management rights and reflecting the status of risks; guide banks and agricultural guarantee institutions should share the cost of risk identification, accelerate the acquisition of higher information transformation value, and prevent the “free rider problem.” In the last part, policies are recommended in four aspects, including risk information sharing, risk identification quality improvement, risk identification cost sharing, and risk information value transformation, which have practical guiding significance for the sustainable development of “government, bank, and guarantee institution” financing guarantee for China’s new agricultural entities.

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The Role of Mutual Guarantee Institutions in the Financial Sustainability of New Family-Owned Small Businesses

Cited by 4 publications

References 53 publications

Are small businesses better prepared for crises? Czech case

Are small businesses better prepared for crises? Czech case

Empirical Evidence of Risks of Public-Loan Finance: Comparison between Self-Employers and SMEs

An evolutionary game study on the cooperation behavior of the “government, banks, and guarantee institutions” in financing guarantee for China’s new agricultural entities

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