Non-financial indicators for credit risk analysis of Chinese technology-oriented micro and small enterprises

Abstract

Technology-oriented micro and small enterprises (TMSEs) play an important role in technology innovation, employment increase, and economic growth. Due to their high risk and resource consuming nature, the Chinese government has set up special funding, and encouraged banks to provide credit support for TMSEs. However, traditional enterprises’ credit evaluation methods are not suitable for TMSEs due to their characteristics. How to assess the credit risk of TMSEs is a relatively new and challenging topic. This study is to identify novel indicators that can capture the creditrelated characteristics of TMSEs. Specifically, we proposed that innovation capability and business models can be used to identify some special aspects of TMSEs’ credit risk. To validate the new indicators, we compared the performance of traditional financial indicators and the new indicators. The results showed that innovation and business model indicators can effectively improve the performance of classifiers in the credit risk assessment of TMSEs.

Keywords:

• Technology-oriented micro and small enterprises
• credit risk assessment
• innovation
• business model text

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 Liu Yuanchun, Shao Zhibao. (2020). China Small and Micro Enterprise Development Research Report-(2019).

2 Credit China. (2017). National Public Credit Information Center. https://www.creditchina.gov.cn/, acessed 09 October 2020.

3 National Enterprise Credit Information Publicity System. (2017). State Administration for Market Regulation. http://www.gsxt.gov.cn/index.html, accessed 09 October 2020.

Additional information

Funding

This work was supported in part by grants from the National Natural Science Foundation of China [grant number #71771037, #71971042].