The effect of business environment and entrepreneurs’ gender on perception of financial risk in the SMEs sector

Abstract

Small and medium-sized enterprises (SMEs) are crucial, and not only for the Czech economy. Their sustainable growth is important for the economy of most European countries. Because of this, the issues surrounding their financing, government support and public perception are widely discussed. The problems connected with external financing of SMEs are closely related to effective management of financial risk, which can minimize competition, create better financial structure and increase the firm’s competitiveness. Our results of the questionnaire survey in the Czech Republic in 2015 were obtained using Structural Equation Modelling (SEM) and revealed a factor which the male sample believed to be an important influence on the perception of financial risk is a bank’s approach to business. This factor is significantly influenced by knowledge, rules and principles including the knowledge of banks’ credit conditions, their transparency and the ability of entrepreneurs to manage financial risks. In the female sample, state and public perception showed to be much more important in the perception of financial risk. Male entrepreneurs mitigate financial risks through a bank’s assistance whereas female entrepreneurs emphasize the role of society.