A scoring approach to credit risk assessment for SMEs and value creation by banks in Benin: an analysis of the role of relationships

Abstract

The Beninese banking system operates within an environment characterized by a high degree of informality among SMEs, insufficient reliable financial information, dependence on bank financing, and the importance of interpersonal relationships in economic transactions. This research aims to analyze the influence of SME credit risk assessment scoring on value creation by banks in Benin, with a particular focus on the moderating role of relationships. To achieve this objective, we adopted a quantitative methodological approach. The paradigmatic positioning is positivism with hypothetico-deductive reasoning. Data were collected from 56 credit analysts from the 14 commercial banks operating in Benin. The results obtained using SPSS version 26 reveal that SME credit risk assessment scoring alone does not constitute a lever for value creation by banks. On the contrary, its isolated use can have negative effects on value creation (β = -0.385; p < 0.05). However, incorporating relationships into the risk assessment process for SMEs appears to be a relevant solution for correcting these shortcomings and optimizing decision-making (β = 0.098 and R² = 0.826). This research suggests that Beninese banks should avoid excessive reliance on standardized scoring models. It appears necessary to develop scoring models adapted to local realities and to strengthen the relationship-building skills of account managers.

JEL Classification: G21; G32 ; M12

Paper type: Empirical research