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Purpose: Small and medium-sized entities (SMEs) operating in the alternative financing sector are typically heterogenous in nature making them differ greatly from traditional banks. Where traditional banks must comply with strict banking regulations, developing uniform regulations for the alternative financing sector remains a challenge. This paper examines the current challenges and solutions from a sociological and institutional perspective in developing standards for SMEs operating in the alternative financing sector in the Netherlands. Adopting minimum quality standards should lead to increased transparency and public trust in the non-banking sector.
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White paper: Financing the circular economy in the tourism sector For SMEs in tourism, a transition to a circular economy can often be costly. Crowdfunding is a promising financing approach for a circular economy in tourism as it can help avoid the bureaucratic and often complex funding application procedures as well as the possible absence of appropriate loans and grants. It is essential, however, for entrepreneurs to follow guidance on how to initiate, develop and propose a crowdfunding campaign. In addition, the white paper has also highlighted the importance of creating and promoting a destination-based crowdfunding platform. Such a platform would allow the destination to create a collective effort and potentially joint crowdfunding campaigns, target tourists and communities, and ultimately promote the destination and its sustainability successes. Entrepreneurs should also consider different aspects after the implementation of the circular project, this for instance may include assessing the benefits of the circular project and communicating these to the funders and all customers. Such communication would ensure support for future campaigns, and a sense of participation in a successful project by the funders and it would also enhance customer experience. Local authorities can have a pivotal role in both cases, when a destination-based platform is created and used, and when entrepreneurs use existing crowdfunding platforms. Authorities can for example provide technical and financial support to SMEs to develop a circular project and can provide promotional support to the campaigns potentially reaching a wider audience through the destination website and by using social media. Tourism is very much a fashion-based industry, and, as such, it needs to have effective marketing. It is increasingly known that sustainability can be a marketing asset for a destination. The circular economy, as a concept, is not well-known, partly because it is new. The wider concept of sustainable tourism is not fully understood by the market, even after its emergence and first implementation nearly forty years ago (Bausch et al., 2021). Steps should be taken to explain and market the concept of the circular economy as often as possible, using a multi-media marketing strategy. The issue of governance might need to be considered if the circular economy is undertaken by a partnership of several SMEs, by an entire destination, or even perhaps by several destinations in one region. It is to ensure equity between partners, maximise benefits, and publicise the benefits of the process. Evidence for the need for effective governance comes from the now abundant experience obtained from efforts to implement sustainable tourism strategies (Bramwell, 2011; Bramwell & Lane, 1993; Bramwell et al., 2017). To conclude: crowdfunding for a circular economy in tourism has the potential to raise essential funds for SMEs that cannot easily be accessed through more conventional financing options, but as in using every funding channel, it requires time and resources to be successful. This white paper provides initial guidance to tourism entrepreneurs that are seeking to engage in fundraising for their circular projects.
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According to various authors access to financing is one of the main limitations constraining further growth for small- and medium sized enterprises (SMEs). Hence, academics and policymakers showed great interest in the topic of access to financing for SMEs. Various researchers argued the competitive advantage of large traditional banks in SME lending over smaller institutions. These institutions with more market power may charge higher financing costs and apply stricter credit policies for SME clients further affecting credit availability. In the past decade, SME financiers have entered the market as a response to the market domination of these large institutions. These new parties must gain trust as they operate in a market that is not regulated. Where traditional banks must comply with strict banking regulations, developing uniform regulations for the alternative financing sector remains a challenge. This paper examines the current challenges and solutions from a sociological and institutional perspective in developing standards for SMEs in the alternative financing sector. Our study contributes to the SME finance literature as it is the first empirical study that explicitly examines the regulatory gap in SME financing through interaction with policymakers, SME entrepreneurs, traditional banks as well as SME financiers themselves. Note: this is a confidential paper, part of a Phd-program and awaiting publication (as per August 2024)
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Money alone is not enough. Also, not for young refugees and migrants aspiring to become self-employed. They might be the necessary to survive, the idea to explore an opportunity or the aspirations towards growth and expansion like any other entrepreneur. Likewise, there are various forms in which they will become self-employed: it might be solo or hybrid self-employed, a micro or small enterprise, and even a medium sized one. Ans in all cases (external) financing will be needed to start and develop the new ventures but knowledge as well how to use it. The aim to the Young Migrant Entrepreneurs Capacity Building project (in brief YMCB in this guide) is to develop an innovative approach to support young migrants’ entrepreneurship through a combination of education, training, and mentoring. The overall connotation is that access to finance deals with the possibility that individuals or enterprises have to access financial services, including credit, deposit, payment, or insurances provided by third parties – formal and informal. Poor access to finance limits individuals, households, and entrepreneurs to function. Access to finance is expected to benefit society at large by accelerating economic growth and helping to raise income for those in the lower end of the income distribution pyramid in reducing income inequality and poverty. But that is only one face of the same coin. Over the past years it has become evident that effective access to finance is determined by: - How well-prepared the prospective migrant/refugee entrepreneurs are to get started - The level of preparation of trainers and coaches working with migrant or refugee entrepreneurs and how well they understand the context their clients live and operate - The level of understanding of staff for FI’s and the degree to which appraisal procedures do not automatically exclude this group as potential clients
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Purpose
In order to better understand how heuristics are used in practice, the authors explore what type of heuristics is used in the managerial domain of financial advisors to small and medium-sized enterprises (SMEs) and what influences the shaping of these heuristics. In doing so, the authors detect possible fast-and-frugal heuristics in day-to-day decision-making of independent financial advisers who help owners of SMEs to acquire capital (e.g. loans, factoring, leasing and equity).
Design/methodology/approach
The authors inductively assessed the work of financial advisers of SMEs. Based on group discussions, the authors drew up a semi-structured interview-protocol with descriptive questions about how financial advisers come to a deal for their clients. The interviews of 19 professionals were analysed by relating them to the theory of fast-and-frugal heuristics.
Findings
Within their decision-making, advisers estimate the likelihood of acceptance by a few financial providers they know well in their personal network with a strong bias towards traditional banking products, although there are a large number of alternatives on the Dutch market. “Less is more” seems to be a relevant principle when defined as satisficing. Heuristics help advisers to deal with behavioural and economic limitations. Also, the authors have found that client interaction, previous working experience and the company the adviser is working for influences the shaping of the simple rules the adviser is using.
Research limitations/implications
The study shows how difficult it is to understand the ecological rationality of a certain group of professionals and to understand the “less is more” principle. Financial advisers to SMEs use cognitive shortcuts and simple rules to advise SME-owners, based on previous experiences, but it is difficult to determine whether that leads to the same or even better solutions for them and their clients than using probability theory and financial optimisation models. Within heuristics, satisficing seems to be a dominant mechanism. Here, heuristics help advisers in recognising possibilities by searching for similarities between a current financing case and previous experiences. The data suggests that if “less is more” is defined as satisficing for one or more stakeholders involved, the principle dominates the decision making of financial advisers of SME's.
Practical implications
The authors suggest the relevance of a behavioural approach to finance by assessing the day-to-day decisions of financial advisers of SMEs. Also, the authors suggest that financial advisers are guided by previous experiences, and they do not fully assess a wide range of options in their work but need shortcuts to fulfil the needs of their clients.
Originality/value
The study comes close to day-to-day decision-making in finance by assessing how professionals make decisions. The authors try to understand types of heuristics in relation with “ecological rationality” and the less is more principle. The authors assess financial advisers of SME-companies, a group that has gotten little research attention until now. The influence of client interaction and of the company the adviser is working for is remarkable in the shaping of the advisers' simple rules.
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Over the past 10 years, different types of financing have become available in the Netherlands. It is now possible to combine bank loans, crowdfunding loans and risk capital. Moreover, fintech applications lower the threshold for applications and reduce response times from weeks to just days or even hours. Fraser, Bhaumik and Wright (2015) point out there is a lack of knowledge of the cognitive process involved in selecting SME financing. This paper looks into the selection process financial advisers use, against the backdrop of the growing range of funding possibilities. To assess this process, we try to understand dominant habits and related heuristics. Within our explorative study, 19 experienced and independent SME financial advisers were interviewed. The questions address their knowledge, skills, experiences and choices in the selection process on the financing or refinancing of working capital and growth. Taking a grounded theoretical approach, we use Atlas TI to label all answers and statements step by step. The findings suggest a strong bias of decision-making towards the more traditional banking products. Yet advisers state they are aware of, and familiar with, other solutions. We have also found that fintech solutions are hardly used to prepare financing solutions up front. Financial advisers estimate the likelihood of acceptance by a few financial providers they know well within their personal network. We suggest that there is a behavioural approach to financing in the day-to-day decisions made by financial advisers. As long as automated selections are not fully transparent and are unable to combine all types of financing up front, financial advisers will be guided by habit or by availability, confirmation and affect heuristics, rather than looking for new financing solutions and combinations.
MULTIFILE
This paper explores whether constitutional litigation contributes to sustaining the equity element of the right to health. Equity entails a fair distribution of the burden of healthcare financing across the different socio-economic groups of the population. A shift towards uncontrolled private healthcare provision and financing raises equity challenges by disproportionately benefitting those who are able to afford such services. The extent to which equity is enforced is an indicator of the strength of the right to health. However, do domestic constitutional courts second-guess, based on equity, policy decisions that impact on healthcare financing? Is it the task of constitutional courts to scrutinize such policy decisions? Under what conditions are courts more likely to do so? The paper addresses these questions by focusing on the case of Hungary, where the right to health has been present in the Fundamental Law adopted in 2010 and the Constitutions preceding it. While the Hungarian Constitutional Court has been traditionally cautious to review policy decisions pertaining to healthcare financing, the system has been struggling with equity issues and successive government coalitions have had limited success in tackling these. The paper discusses the role of constitutional litigation in addressing such equity concerns. In doing so, it contributes to the discussion on the role of domestic constitutional courts in the protection of social and economic rights.
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The shift towards a more sustainable circular economy will require innovations. While SMEs can contribute to this development, financing innovations within SMEs is difficult. Various authors have not ed moreover that the concept of the circular economy has further increased the complexity of investment decisions concerning sustainable innovations, due to the multiple value creation and new business models involved . On the other hand
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