Does behavioral biases matter in SMEs' borrowing decisions? Insights from Morocco
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DOIhttp://dx.doi.org/10.21511/bbs.19(1).2024.15
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Article InfoVolume 19 2024, Issue #1, pp. 170-182
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Bank financing decisions by small and medium-sized enterprises (SMEs) are crucial to their growth and survival, particularly in emerging economies such as Morocco. This study aims to assess the impact of behavioral biases on these decisions, an area little explored in the existing financial literature. The main objective is to analyze how behavioral biases such as overconfidence, risk aversion, confirmation bias, anchoring, and managerial myopia biases influence bank financing decisions of Moroccan SMEs. The approach adopted is quantitative and uses robust least squares regression to analyze data collected from 167 Moroccan SMEs. The results reveal that overconfidence and anchoring have a significant positive impact on the propensity to take out bank loans, while risk aversion and confirmation bias have a negative effect. Managerial myopia had no significant influence. Control variables such as past financial performance, the length of the banking relationship, and lower risk also positively influence the financing decision.
- Keywords
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JEL Classification (Paper profile tab)G32, G41, M13, O16
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References38
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Tables9
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Figures6
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- Figure 1. Normality test for OLS regression residuals
- Figure 2. Normality test for RLS regression residuals
- Figure 3. Cross-sectional analysis
- Figure 4. Recursive residuals
- Figure 5. Influence statistics (COVRATIO)
- Figure 6. CUSUM test and the CUSUMSQ tests for RLS regression
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- Table 1. Research hypotheses and variables that represent them
- Table 2. Descriptive statistics
- Table 3. Correlation matrix
- Table 4. Variance inflation factors for OLS
- Table 5. Heteroscedasticity test (Breusch-Pagan-Godfrey) for OLS regression
- Table 6. Ramsey RESET test for RLS regression
- Table 7. Variance inflation factors for RLS
- Table 8. Heteroskedasticity test: Breusch-Pagan-Godfrey for RLS
- Table 9. RLS regression results
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