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Small and Medium-Sized Enterprises’ Growth Boosted by Credit Risk Management

A recent study has highlighted the crucial role credit risk management plays in boosting small and medium-sized enterprises (SMEs) growth in Timor-Leste.

Study Findings

Researchers at the University of Dili analyzed data from 100 SMEs in Dili and found a significant positive correlation between credit risk and SMEs growth. The study, published in the Timor-Leste Journal of Business and Management, suggests that banks should focus on assessing credit risk when lending to SMEs.

“We found that SMEs growth is not affected by interest rates, but rather by credit risk,” said Dr. [Name], lead author of the study. “This suggests that banks should focus on assessing credit risk when lending to SMEs.”

Credit Risk Management

The researchers used a statistical model to analyze the data and found that credit risk has a strong positive relationship with SMEs growth. They also found that interest rates have a limited impact on SMEs growth.

“The findings suggest that banks can increase their predictability of loan repayment by focusing on credit risk assessment,” said Dr. [Name].

Limitations and Future Research Directions

While the study provides valuable insights into the relationship between credit risk and SMEs growth, it has some limitations. The researchers acknowledge that the sample size is limited to 100 SMEs in Dili and that future studies should be conducted in other districts and industries.

The authors also recommend using alternative data collection methods, such as interviews and direct observation, to validate responses from SMEs and minimize data bias.

Implications for Policy and Practice

The study’s findings have significant implications for policymakers and financial institutions in Timor-Leste. By prioritizing credit risk management, banks can increase the predictability of loan repayment and support SMEs growth.

Policymakers should also consider implementing policies that promote credit risk assessment and management to encourage entrepreneurship and economic development.

About the Study

The study was conducted by researchers at the University of Dili and published in the Timor-Leste Journal of Business and Management. The journal is a peer-reviewed publication that aims to disseminate research on business and management-related topics in Timor-Leste and beyond.

References

  • Abdillah, W., & Hartono, J. (2015). Partial Least Square (PLS) Alternatif Structural Equation Modeling (SEM).
  • Belo, T. F. (2019). The Relevance of Microcredit and its Impact on East Timor MSEs and Poverty Reduction.
  • Chen, L. (2015). Sustainability and company performance : Evidence from the manufacturing industry.
  • Consultant, B., Hansen, L. M. P., & Dialogue, P. (2009). Increasing Access to Investment Credit for SMEs In Timor-Leste : A Review of Options.
  • Costantino, G. (2013). Agência Nacional Para A Avaliação Acreditação Académica. Timor-LESTE.
  • Hair, J. F. et al. (2010) ‘Multivariate Data Analysis. Seventh ed’.
  • Hair Jr, J., Sarstedt, M., & Hopkins, L. G. Kuppelwieser, V. (2014). Partial least squares structural equation modeling (PLS-SEM) An emerging tool in business research.

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