Does SME’s financing decisions follow pecking order pattern? The role of financial literacy, risk preference, and home bias in SME financing decisions

Figures & data

Figure 1. Theoretical framework.

Table 1. Outer loading, construct reliability and Average Variance Extracted (AVE)

Construct	Item	Outer Loading	Cronbach’s Alpha	rho_A	Composite Reliability	Average Variance Extracted (AVE)
Financial Decision	FD	1.000	1.000	1.000	1.000	1.000
Home Bias	HB1	0.768	0.617	0.646	0.794	0.565
	HB4	0.648
	HB5	0.827
	HB*FL	0.827	1.000	1.000	1.000	1.000
Risk Preference	RP1	0.598	0.412	0.568	0.750	0.610
	RP3	0.929
	RP*FL	1.059	1.000	1.000	1.000	1.000
	RP*HB	1.465	1.000	1.000	1.000	1.000
Financial Literacy	FL	1.000	1.000	1.000	1.000	1.000

Table 2. Discriminant validity (Fornell-Larcker Criterion)

	HB	HB*RP	FD	FL	FL*HB	FL*RP	RP
HB	0.751
HB*RP	−0.056	1.000
FD	−0.126	0.074	1.000
FL	0.276	0.051	0.030	1.000
FL*HB	0.148	0.141	0.111	0.327	1.000
FL*RP	0.071	0.225	0.072	0.132	0.425	1.000
RP	0.414	−0.056	−0.136	0.053	0.070	0.070	0.781

Table 3. Heterotrait-Monotrait Ratio (HTMT)

	HB	HB*RP	FD	FL	FL*HB	FL*RP	RP
HB
HB*RP	0.074
FD	0.169	0.074
FL	0.343	0.051	0.030
FL*HB	0.182	0.141	0.111	0.327
FL*RP	0.091	0.225	0.072	0.132	0.425
RP	0.745	0.121	0.164	0.085	0.139	0.119

Table 4. Collinearity statistics & VIF values

Relationship	VIF
HB * LK	1.000
HB1	1.232
HB4	1.177
HB5	1.297
KP1	1.000
PR * HB	1.000
PR * LK	1.000
PR1	1.072
PR3	1.072
Score_LK (FL)	1.000

Table 5. R square

Variable	R Square	R Square Adjusted
HB	0.076	0.075
FD	0.045	0.036
RP	0.176	0.173

Table 6. F-square

	HB	HB*RP	FD	FL	FL*HB	FL*RP	RP
HB			0.009				0.210
HB*RP			0.002
FD
FL	0.082		0.000				0.005
FL*HB			0.009
FL*RP			0.001
RP			0.009

Table 7. Model fit

	Saturated Model	Estimated Model
SRMR	0.096	0.096
d_ULS	0.259	0.259
d_G	0.078	0.078
Chi-Square	289.519	289.360
NFI	0.401	0.402

Table 8. Hypotheses Testing

Hypo-thesis	Path	Std Beta	Std. Error	t-value	Bias	Confidence Interval		p	Decision
						2.5%	97.5%
H1	FL -> FD	−0.011	0.045	0.254	−0.001	−0.106	0.072	0.799	Rejected
H2	HB -> FD	−0.150	0.040	3.740	−0.003	−0.224	−0.073	0.000	Accepted
H3	RP -> FD	−0.100	0.047	2.150	0.001	−0.188	−0.010	0.032	Accepted
H4	FL -> HB	0.276	0.040	6.967	−0.001	0.195	0.347	0.000	Accepted
H5	FL -> RP	0.053	0.042	1.264	−0.003	−0.030	0.134	0.207	Rejected
H6	FL*RP -> FD	0.027	0.047	0.584	−0.001	−0.055	0.125	0.559	Rejected
H7	FL*HB -> FD	0.102	0.044	2.283	0.004	0.014	0.185	0.023	Accepted
H8	HB -> RP	0.433	0.043	10.002	0.005	0.336	0.508	0.000	Accepted
H9	HB*RP -> FD	0.027	0.027	0.981	0.005	−0.015	0.088	0.327	Rejected

FL = Financial Literacy; HB = Home Bias; RP = Risk Preference; FD = financing Decision

Table 9. Total, indirect effect & specific indirect effect

Total Indirect Effects
	Original Sample (O)		Sample Mean (M)			Standard deviation (STDEV)		T Statistics (|O/STDEV|)		P Values
HB -> FD	−0.044		−0.044			0.021		2.075		0.038
HB -> RP
HB*RP -> FD
FL -> HB
FL -> FD	−0.035		−0.035			0.013		2.669		0.008
FL -> RP	0.119		0.120			0.021		5.604		0.000
FL*HB -> FD
FL*RP -> FD
RP -> FD
Specific Indirect Effects
		Original Sample (O)		Sample Mean (M)	Standard Deviation (STDEV)		T Statistics (|O/STDEV|)		P Values
FL -> HB -> FD		−0.029		−0.030	0.013		2.337		0.020
HB -> RP -> FD		−0.044		−0.044	0.021		2.075		0.038
FL -> HB -> RP -> FD		−0.012		−0.012	0.006		1.953		0.051
FL -> RP -> FD		0.007		0.007	0.006		1.186		0.236
FL -> HB -> RP		0.119		0.120	0.021		5.604		0.000