Jaroslav Belás

Personal Characteristics of Entrepreneurs in the Context of Perception and Management of Business Risk in the Sme Segment

Abstract. The issue of business in the segment of small and medium-sized companies is a very actual area of scientific research today. Currently, great importance is given to research of personal and knowledge preconditions of people for doing business. The aim of this article was to examine the relationship between personality characteristics and approach to the perception and management of business risks. Based on the preferred personality qualities and knowledge the entrepreneurs have been included into two categories, namely they are artist-entrepreneurs and businessmen-laborers, also the differences in their entrepreneurial attitudes have been examined. Both groups of entrepreneurs in our research rate market risk as the most important risk, which was demonstrated by a decline in performance of companies during the crisis. Our results showed that there are significant differences in the attitudes of these two categories of entrepreneurs in approaching credit risk, where it was found out that the defined categories of business have different approaches to knowledge of credit conditions of commercial banks. The results of our study have showed a high degree of confidence of individual groups of entrepreneurs when evaluating their ability to manage financial risks in the company and the high intensity of entrepreneurial optimism regardless of the personal characteristics of entrepreneurs.Keywords: small and medium enterprises, personal characteristics of entrepreneurs, financial risk, credit riskJEL classification: L26, O16, G21IntroductionSmall and medium-sized enterprises play an important role in the economic system of any developed country.In this context, it is clear that the issue of entrepreneurship in the small and medium-sized companies is very topical area of scientific research. Currently, great importance is given to research of personal and knowledge characteristics of people for business because many of the results that are mentioned below show the fact that to be an entrepreneur does not fit all the people and the business needs a specific properties. These properties may affect the approach to the assessment and management of business risks that significantly influence the success in business.Theoretical backgroundThe business environment is determined by personality characteristics and motives of individual entrepreneurs. Business situations are often unique in their unpredictability, complexity and changing requirements during the business process. Entrepreneurs must be capable to have the features of several personalities at once and as one person to demonstrate the ability to act as investors, inventors, accountants, dispute investigators, leaders, technologists, marketing specialists and top sellers. For this reason, the more knowledge and skills the entrepreneur is capable to demonstrate the better. (Frese, Gielnik, 2014)According to Deakova, Drazovska, Grznarik and Kondasova (2010) the most important personal qualities for an entrepreneur are: courage, self-reliance, responsibility, determination, perseverance, proactive approach, creativity and scholarship in a particular area, where this businessman intends to do business. The entrepreneurs have a tendency to choose themselves an area of business that has a consistency between their personal characteristics and requirements for success. In addition, they tend to manage their business by using their strong and specific qualities. (Sidik, 2012)Kvietok (2013) states, that decision to take on the business risk is symptomatic of a certain type of people. (According to Hvide and Panos, 2014 the individuals who are more risk tolerant are more likely to start up firms.) A significant part of the motivation to take risks in business follows from the success motivation. To achieve the set goals, successful people are willing to take on reasonable risks associated with feedback about the level of achieved results. …

Model of the loan process in the context of unrealized income and loss prevention

Currently, in the banking sector of the economically developed countries is pos- sible to monitor the trend of high liquidity and the low volume of creditnancing of Small and Medium-sized Enterprises (SMEs). is sit uation is far from ideal because the banks are losing potential revenue and the SME segment within appropriate extent cannotnance its business objectives through bank loans. e aim of the paper was to propose a model for a comprehensive assessment of the credit worthiness of the client and retrospective evaluation of bank lending in terms of unrealized income and loss pre- vention, resulting from the application of exit strategies in the SME segment. e aim of this article was to propose a model for comprehensive assessment of the credit worthiness of the client and retrospective evaluation of bank lending in terms of unrealized income and loss prevention, resulting from the application of exit strategies in the SME segment. Our most importantnding is that there is potentially quite a large group of clients who have problems with the bank ratings, but despite the fact that the bank does not give them credit, these companies continue to remain on the market. Another important � nding is that there is the possibility of improving the loan process in the SME segment. ese options are incorporated in our proposal to t he loan process.

SIGNIFICANT ATTRIBUTES OF THE BUSINESS ENVIRONMENT IN SMALL AND MEDUIM-SIZED ENTERPRISES

ABSTRACT. Aim of following contribution is to define and quantify selected attributes of the business environment in Small and medium-sized enterprises (SME). In this context, our own research was prepared and gradually implemented, where the intensity of individual business risks, status, motivation, feelings of entrepreneurs in SME segment, relationship to the bank, state, society, and business optimism in the Czech Republic and Slovakia was analyzed. Due to the global financial crisis, conditions for SME business have worsened. Average decrease in the profitability amounted in 10.44% in the Czech Republic, and in Slovakia 12.01%. The most important business risk for SME is the market risk (lack of market space for the realization of own production). In the Czech Republic 79.44% and 80.49% of Slovak entrepreneurs reported market risk as a key business risk at present. The perception of entrepreneurs by the society and by the state is not good in both of countries. In the Czech Republic and in Slovakia, lots of firm owners have met with corruption and cronyism. Despite the deterioration in the business environment, Czech and Slovak entrepreneurs are very optimistic. Results of our research confirmed that there is necessary to form complex conditions for business development of small and medium-sized businesses in both countries.JEL Classification: L26, O16, G21Keywords: small and medium enterprises, business risks, status, motivation, feelings of entrepreneurs.IntroductionSmall and medium-sized enterprises (SME) have become an increasingly important component of economic development representing a substantial proportion of the national economies all around the world (Karpak and Topcu, 2010). In this context, Henderson and Weiler (2010) indicate that SME can be characterized as major engine of economic growth.SME have specific features and fulfill important tasks in the economic system. SME have significantly contributed to an employment and GDP, help to create more intense competitive environment which has a great importance in relation to prices and quality of products and services. SME helps with their flexibility to fill the market space and they are bearers of important innovations.Share of SME in total number of active enterprises in the Czech Republic in 2012 was 99.86%. Share of added value in 2012 was 53.81%. Share of SMEs employees in total employment in business sector in the Czech Republic in 2012 was 59.43% (Ministerstvo prumyslu a obchodu Ceskej republiky, 2013). In Slovakia, share of SME in total number of active enterprises was 99.2%; in total employment was 59,5%. Share of added value was 55.6% and share of SME in profit before taxes was 51.6% (Narodna agentura pre rozvoj maleho a stredneho podnikania, 2013).SME segment has its own characteristics and disadvantages, which are transformed into business risk. This risk can be divided into market risk (lack of market space for the realization of own production), financial risk (poor access to finance businesses), operational (risk of failure to deal with the processes in the production of goods and services), personal risk (risk due to poor staff) and other risks.Important factor today, that has influence on existential ability of SME, is narrowed market space due to the causes of the global economic crisis.Business activities are significantly determined by the environment of the company, which forces it to use a particular method of behavior, to use the choice of particular business goals and ways of achieving them. In this context, the very important role is played by social environment and political and legal environment that is created by the state authorities.In this context its considered to be very important to investigate the position of SME in the socio-economic system, because it can be presumed that the positive perception of these companies by social environment can positively stimulate their financial performance and accelerate the positive impact of these companies on the whole society. …

Comparison of selected methods for performance evaluation of Czech and Slovak commercial banks

The successful development of economy is based on the efficient and stable performance of commercial banks. A broad range of methods is used to evaluate them. Each method has its own specific features and logic, which results in the existence of discrepancies in the results of their evaluation. For this reason, as well as due to the elimination of model risk, numerous methods are recommended in practice to detect multidimensional disproportions in bank performance and to create a comparator base. This led to the realization of the research aimed at assessing the performance of selected Czech and Slovak banks by applying several methods and evaluating the process and outcome differences of these methods. The data were obtained from the non-consolidated financial statements published in the annual reports of the evaluated banks. The analysis showed that all methods have roughly the same results. Almost perfect correlation had been found not only among the methods of multi-criteria evaluation, but also among the other investigators.

Collateral requirements for SME loans: empirical evidence from the Visegrad countries

AbstractThe purpose of this paper is to examine the determinants of collateral for small and medium enterprises (SMEs) in the context of Visegrad countries: Czech Republic, Slovak Republic, Hungary and Poland. The data set for this paper was obtained from the Business Environment and Enterprise Performance Survey (BEEPS), which was conducted by the World Bank and the European Bank for Reconstruction and Development (EBRD) from 2012–2014. A binary logistic regression model with different specifications was employed to examine the effect of independent variables on the incidence of collateral. The results show that risky borrowers need to pledge collateral and the reduction of asymmetric information can lower the incidence of collateral for SMEs. Moreover, we find that female borrowers are more likely to pledge collateral than male borrowers are. The results also suggest that loans with a longer maturity are more likely to be collateralized than short-term loans. We find evidence that bank-borrower proximit...

ACTUAL PROBLEMS OF BUSINESS RISK IN SME SEGMENT. CASE STUDY FROM SLOVAKIA

Abstract The aim of this article was to define, quantify and compare the significant attributes of business risk for small and medium-sized enterprises (SMEs) in the selected regions of Slovakia. The data was collected through a questionnaire. The whole research was conducted in the Bratislava region on a sample of 102 SMEs, in the region of Trencin on a sample of 105 SMEs and in the Zilina region on a sample of 168 SMEs. Thus we compared important factors of business risk in the most economically developed region of the Slovak capital to the average regions of Trencin and Zilina. On the basis of the results of our research, we can conclude that the most important business risk is market risk in all regions. The average value of perceived market risk was higher than 50%. For this reason entrepreneurs have indicated the existence of negative trends in performance and profitability of their companies.

The Impact of the Financial Crisis on Business Ethics in the Banking Sector: A Case Study from Slovakia

Abstract The importance of ethical standards for financial markets is based on the purpose of commercial banks and other financial institutions which operate with money of others. Besides significant economic implications, the financial crisis has also revealed considerable lack of moral values in commercial banking, which has been reflected by a very unscrupulous approach of bankers to their clients. The crisis has also caused a fundamental turnaround in public opinions on commercial banking and increased the pressure on application of moral principles in banking, which represents an appropriate complement of banking regulations. The aim of this article is to determine the basic attributes of business ethics in commercial banking and quantify changes in moral attitudes of bank employees in Slovakia through own research, which occurred during the financial crisis. Moral attitudes of bank employees are analyzed in relation to reaching customer satisfaction. The research focuses on identificating satisfaction of bank employees and also on how their satisfaction reflects acceptance of customers’ needs. A part of the research also deals with evaluation of customer satisfaction in the same timeframe. The results of our empirical research show that the low level of satisfaction and loyalty of bank employees is transferred to the low acceptance rate of customer need to sell bank’s products in the banking sector in Slovakia. The low level of satisfaction and loyalty has also caused a decline in the overall customer satisfaction. Index of personal satisfaction of bank’s customers has slightly increased in the examined period, but its current level is still very low.

How do banks implement the capital regulation requirement

This paper studies the capital regulation implementation by commercial banks. Specifically, the authors examine how commercial banks achieve the required capital regulation requirements in the context of the Basel regulation frameworks and whether this compliance promotes banks’ efficiency. The authors use partial adjustment models to analyse the banks’ quarterly financial statement releases in both preand post-regulation periods. On average, the empirical evidence shows that the commercial banks pursued credit growth at a higher priority than capital regulation requirements. Retained earnings and riskweighted assets are permutations to account for the bulk of both higher riskweighted capital ratio and capital-to-total-assets ratio, while the shares’ issuance played a lesser role. In the post-regulation period, the banks adjusted to the riskweighted capital target faster than in the pre-regulation period. Adjustment to the capital-on-total-assets ratio was slower. The authors find that the manner of the adjustment by these commercial banks to the capital target led to a loss in efficiency. The result implies the need to tighten the capital regulation implementation and improve risk-weighted assets management. Received: January, 2018 1st Revision: April, 2018 Accepted: June, 2018 DOI: 10.14254/20718330.2018/11-3/14 Journal of International Studies S ci en ti fi c P a pe rs

APPROACHES OF CZECH ENTREPRENEURS TO DEBT FINANCING AND MANAGEMENT OF CREDIT RISK

The aim of this article was to define, quantify and compare significant factors of the debt financing in the segment of SMEs. The research focused on the significant differences between groups of entrepreneurs, defined in relation to gender, education, size and age of the company, was carried out in the Czech Republic in 2015 on a sample of 1,141 respondents. We found that while the importance of the credit risk increased during the crisis, the level of knowledge of conditions under which commercial banks provide loans is relatively low between entrepreneurs. Entrepreneurs presume that the credit conditions in commercial banks are not transparent, but agree that the better knowledge of credit criteria allows for easier access to funding. Substantial differences in the assessment of the factors of credit risk by defined groups of entrepreneurs were identified.

Important factors of financial risk in the SME segment

The aim of the article is to define and quantify the significant factors which influence the intensity of financial risk, and to compare the perception of financial risk among groups of entrepreneurs in the SME segment according to their motivations for starting a business. In relation with the aims defined under this research, we carried out a survey of the entrepreneurial environment of SMEs in 2015, using a sample of 1,141 respondents (the owners of the enterprises). We used Z-score and regression analysis to assess our hypotheses. The results of our research confirmed that the attitude towards financial risk is determined by the following factors: CRM (Correct risk management by entrepreneurs), CFR (The influence of credit risk during a crisis), and SFS (Sufficient funds for SMEs). The entrepreneurs who started their business because they considered it to be their mission answered more frequently that they can correctly manage financial risk in their companies in comparison with the entrepreneurs who started their business for money. The difference was statistically significant. Our research also confirmed that entrepreneurs who started their business because of money perceived the effects of crisis on their company’s financial risk more intensely. Received: June, 2017 1st Revision: September, 2017 Accepted: December, 2017 DOI: 10.14254/20718330.2018/11-1/6 Journal of International Studies S ci en ti fi c P a pe rs