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We use a proprietary data set of financial statements collected by banks to examine whether economic growth is related to the use of financial statement verification in debt financing. Exploiting the distinct economic growth and contraction patterns of the construction industry over the years 2002–2011, our estimates reveal that banks reduced their collection of unqualified audited financial statements from construction firms at nearly twice the rate of firms in other industries during the housing boom period before 2008. This reduction was most severe in the regions that experienced the most significant construction growth. These trends reversed during the subsequent housing crisis in 2008–2011 when construction activity contracted. Moreover, using bank- and firm-level data, we find a strong negative (positive) relation between audited financial statements during the growth period, and subsequent loan losses (construction firm survival) during the contraction period. Collectively, our results reveal that macroeconomic fluctuations produce temporal shifts in the overall level of financial statement verification and temporal shifts in verification are related to bank loan portfolio quality and borrower performance.

This study examines whether restatements involving revenues have a different impact on lending decisions than restatements involving expenses and whether restatements that result in increased net income impact lending decisions differently than restatements that result in decreased net income. Using an experimental methodology, a scenario involving a hypothetical loan applicant was presented to 64 commercial lenders. Participants assessed the risk associated with the loan applicant as well as the likelihood of credit approval. This study did not find statistically significant differences, at the current sample size, for risk assessments or likelihood of credit approval, between restatements caused by revenue misstatements versus restatements caused by misstatements of expenses. In addition, no statistically significant differences were found at the current sample size, for risk assessments or likelihood of credit approval, between income-decreasing restatements and those involving income-increasing restatements.

The optimal market structure is one of the fundamental issues of economic theory. At that, companies’ efficiency in the market is associated with resource availability as a whole and finance resources, in particular. The structure of the banking market in terms of commercial loans determines a number of parameters of the economic system, such as its stability, growth potential, entrepreneurial activity, the state of commodity markets, the competitiveness of companies, etc. A comparative analysis of countries in terms of the ratio of commercial loans to GDP allows us to identify promising markets and strategic avenues for the development of the global banking industry and investment policy. However, a lack of regular and timely statistical reviews often impedes the identification. With the view to performing a comparative analysis for the EA/ЕU macroregion, the authors attempt to establish the types of the banking market in Russia based on a fuzzy rank approach using the probability theory. Using the data for 2009–2018, the authors assess bank concentration in Russia by a number of indicators. During the period under review, the volume of commercial banking lending in Russia experienced a steady increase. At the same time, there is a clear downward trend in the number of banks; several local “breakdowns” happen once every two years, i.e. the compression rate is reducing. Within the framework of the accepted gradation, the values of concentration indices taken separately do not allow arriving at a firm conclusion, since they indicate contradictory statuses of the sectoral market type. The integrated approach proposed in the paper helped find that, despite a relatively large number of participants in the Russian banking market, it should be primarily identified with a monopoly. At that, the values of the Herfindahl-Hirschman Index (HHI) and standard concentration fall within the oligopoly boundaries. This indicates the fuzzy nature of the sectoral market. The empirical results obtained are of use when analyzing competition, developing antimonopoly regulation measures, adjusting the banking sector development strategy and investment policy.

Financial access is a cornerstone of entrepreneurial ecosystems, stimulating business formation, innovation, and expansion. Financial institutions, particularly banks and credit systems, serve as dual agents of economic and environmental change. This empirical study examines the relationship between financial access, entrepreneurship, and sustainable development in BRICS. Using panel data (2000–2023) from the World Bank and robust PLS-SEM, the analysis reveals a dual-edged impact: financial access drives economic resilience and entrepreneurial activity but also contributes to environmental challenges such as resource overuse and ecological degradation. These findings underscore a paradox: financial systems catalyze growth while simultaneously straining. The study prioritizes actionable strategies for aligning financial mechanisms with sustainability goals, urging BRICS policymakers to reconcile economic ambitions with ecological boundaries.

Purpose. Coverage and systematization of the main approaches to the development of strategies for financing infrastructure projects in the field of public-private partnership, in particular, in the construction sector of Ukraines economy. Methodology. The methodological basis of the article are scientific publications, regulations of Ukraine, analytical reports of world financial institutions, Internet resources. The research used a systematic approach, methods of analysis and synthesis, comparison and logical generalization. Findings. The most acceptable models of financing infrastructure projects and creating conditions for attracting private capital on the basis of public-private partnership in Ukraine are identified. Originality. The work analyzes the classification of projects according to the type of source of cost financing, summarizes the experience in building contract models for their financing, explores the most common tools for financing infrastructure projects, identifies the provisions on which project financing is based, and finds out what underlies it. Practical value. The results of the study can be useful for public authorities, which should encourage private partners to participate in long-term projects. The research may be of interest to businesses that are potential investors in public-private partnership projects.

SMEs are the driving force of economies. For many years, this supported, somewhat ironically, the neglect in designing a coherent regulatory framework to ensure their fair treatment. But the reality is that many SMEs face information asymmetries, lack resources and negotiation power and in the absence of regulatory protection are exposed to harm. In recent years, mounting ad-hoc, eclectic responses have mushroomed to address various aspects of appropriate conduct standards, dispute resolution and accountability. While these mechanisms allow for adaptability and dynamism, they may prove to be inadequate to achieve the FCA’s consumer protection objectives. This article proposes to broaden the application of vulnerability, which was initially designed with natural persons in mind, to guide the fair treatment of SMEs. It argues that expanding the application of vulnerability to SMEs would reflect the hybrid nature of this business model which is often akin to that of individual consumers. Conduct of business, Vulnerability, SMEs, FCA perimeter, Regulated activities, Commercial lending, Industry codes of conduct, Senior Managers and Certification Regime, Dispute resolution and redress, The Financial Markets Test Case Scheme, Business Lending Standards

This study examines whether knowledge about a borrower’s internal audit function affects commercial lending decisions. An experiment was conducted with 61 lending officers, who provided risk assessments and lending probabilities for a hypothetical line of credit applicant. The independent variable, the company’s internal audit function, was manipulated using three levels—no internal auditing, weak internal auditing, and strong internal auditing. Results show that lenders’ risk assessments are not influenced by a borrower’s internal audit function, but the likelihood of approving a line of credit is positively impacted. More specifically, for a borrower whose financial statements are compiled by a regional CPA firm, the existence of an internal audit function enhances the probability of line of credit approvals, although the strength of the internal audit function does not appear to have an impact. An implication for companies that want to enhance their borrowing prospects is that it may be worthwhile to invest in some form of internal auditing, but they do not have to be very concerned about its strength for purposes of obtaining lines of credit from banks.

This paper reviews studies that have examined how accounting information impacts commercial lending judgments. Issues discussed involve the usefulness of accounting data in lending decisions, effects of different accounting methods on lenders’ judgments, bankruptcy and default judgments, and decision processes pertaining to the use of accounting information in lending decisions. Additionally, the paper reviews the research on how audits and other forms of assurance influence commercial loan officers’ judgments. Topics include the way perceived auditor independence influences loan officers’ judgments, the impact of financial statement audits and audit opinions on lending decisions, how internal control reports and other CPA firm reports influence loan decisions, ways in which audit report disclosures and wording impact lending decisions, how perceived auditor quality affects lending decisions, and the effects of limited assurance engagements on loan officers’ judgments.

The risk management process is based on the evaluation procedure that encourages authors to concentrate on the study of evaluation problems as the fundamental components of the risk management system. The key position within the risk system belongs to the credit risk having a complex nature, a wide range of effects, manifested in various forms of credit relations, acting as an autonomous object of research, and one of the structural elements of the situation of uncertainty. At the same time one of the forms of credit rela- tions of production are the relations between enterprises within the commercial lending resulting in receivables and payables. Rele-vant and important is the perspective of credit risk estimate the consequences of which are the possible critical areas of unfinished debt within the commodity-money relations in the industrial sector as well as an effective evaluation procedure at the stage of man- agement decision-making to prevent non-payment problem in the economy and, consequently, increase the level of quality of the enterprise debt. When studying the problem areas in the credit risk evaluation procedures three stages are identified: 1) the reduction of problems to a certain unity in the functional aspect i.e. their classification; 2) combining the individual problems in holistic essen- tial groups i.e. problem structuring; 3) the reconciliation, bringing separate challenges to the uniformity i.e. their unification. Based on the research results, it can be confirmed that the problem areas in credit risk estimate are monitored by certain vectors: terminolo- gy sector; the legislative framework; information material; economic forces; methodological technology.