The MNB’s study published in January 2022 investigated the probability of Hungarian small and medium-sized enterprises’ (SMEs) credit default and found that in the case of SMEs owned by a single person this risk of default might be twice as high as that seen in enterprises with multiple owners. As the average number of owners of SMEs in Hungary has been declining steadily since the political transition with the average number of four persons in 1989 falling to below two by now, this correlation is increasingly relevant. Although it might seem obvious to note that this phenomenon is explained by the size of the enterprises, the composition of the sector or tax arrangements, in conducting the analysis it became clear that currently a fundamental economic and social transformation is happening. It is becoming increasingly general that no other persons are needed to start a business and it is easier to buy out others as loans are widely available. However, sole proprietors and managers tend to be less careful when making decisions, and take higher risks with no steady profitability.
The original study is available in English here: OP 144. Csaba Burger: Defaulting Alone:The Geography of Sme Owner Numbers and Credit Risk in Hungary (mnb.hu)
The abstract compiled on the basis of the article: EGYEDÜL VÁLLALKOZNI KOCKÁZATOSABB: A TULAJDONOSSZÁM ÉS A HITELKOCKÁZAT ÖSSZEFÜGGÉSE EGY MNB-TANULMÁNY ALAPJÁN – CMBP (It is riskier to become a sole proprietor: the correlation between the number of owners and credit risk based on an MNB study)