Behavioral Patterns That Influence the Financing Choice Models of Small Enterprises in Ecuador through Latent Class Analysis

Abstract

The presence of small enterprises in developing countries makes new information on these enterprises substantially valuable for these countries. Governments have put forward numerous action plans and public policies to improve access to external credit. However, despite all technological advances, there are still situations linked to the theory of asymmetric information between lenders and borrowers, which influences the granting of financing. Under this premise, the present research uses latent classes to analyze the financing decision behavior patterns of 1033 business owners who faced the financing process and the constraints faced by lenders based on the asymmetric information theory. The results allowed the construction of a model that identified five profiles of trust in financial institutions among entrepreneurs that affected their financing decisions.