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The Determinants of Online Loan Applications from Small Businesses

Han, L and Greene, F (2007) The Determinants of Online Loan Applications from Small Businesses Journal of Small Business and Enterprise Development, 14 (3). pp. 478-486.

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Abstract

Purpose – The purpose of this paper is to examine both the characteristics of the business customers and the types of venture which make use of online loan applications. Despite the growth in the use of technology in banking and the advent of online banking, little research has been conducted on the factors underlying online loan application behaviour amongst business banking customers. Design/methodology/approach – A multivariate analysis is conducted on a USA dataset to empirically test the hypotheses derived in this paper. The empirical evidence is drawn from the US Survey of Small Business Finances, which contains 3,561 sample ventures, representing 5.3 million small businesses in the USA. Findings – The paper finds that online loan behaviour is largely determined by the characteristics of the entrepreneur, rather than that of the venture. It is also found that factors that trust, evident in the length of the relationship between the applicants and their primary lender, is important. Moderating these effects is further evidence that suggests the number of lenders and distance between lenders and applicants has a marked effect on online loan behaviour. Originality/value – This paper identifies the factors determining small business online loan application behaviour. This is important because the nature of online loan behaviour is changing the existing relationships between banks and customers. Whilst online loan applications afford banks the opportunity to substantially reduce costs, the danger is that long term relationships with customers are harder to cement.

Item Type: Article
Divisions : Faculty of Arts and Social Sciences > Surrey Business School
Authors :
AuthorsEmailORCID
Han, LUNSPECIFIEDUNSPECIFIED
Greene, FUNSPECIFIEDUNSPECIFIED
Date : 1 September 2007
Identification Number : https://doi.org/10.1108/14626000710773556
Additional Information : This article is © Emerald Group Publishing and permission has been granted for this version to appear here. Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.
Depositing User : Symplectic Elements
Date Deposited : 28 Mar 2017 14:38
Last Modified : 28 Mar 2017 14:38
URI: http://epubs.surrey.ac.uk/id/eprint/205749

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