EXAMINING SME OWNERS' WILLINGNESS TO SUBMIT PERSONAL AND BUSINESS DOCUMENTS AS A PROXY FOR TRUST AND CREDITWORTHINESS: THE PSYCHOLOGICAL COLLATERAL PARADIGM
EXAMINING SME OWNERS' WILLINGNESS TO SUBMIT PERSONAL AND BUSINESS DOCUMENTS AS A PROXY FOR TRUST AND CREDITWORTHINESS: THE PSYCHOLOGICAL COLLATERAL PARADIGM

Summary/Abstract: Moving beyond the conventional analysis of tangible assets and financial documentation as mere bureaucratic requirements, this research posits that an SME owner's willingness to submit personal and business documents constitutes a critical, non-physical form of collateral. It symbolizes trust, transparency, and commitment to institutional scrutiny. Employing a quantitative survey methodology with 45 management staff from selected Nigerian commercial banks, the study utilized descriptive statistics and chi-square analysis to test its hypotheses. The findings robustly confirm that significant documentation is required by banks (χ² = 47.945 > 7.82) and that proper record-keeping is intrinsically linked to business growth (χ² = 59.737 > 7.82). Crucially, it reveals that a notable minority (13.3%) of SME owners are unwilling to provide required documentation, a barrier not fully explained by a lack of capacity. This study concludes that the documentation process is not only a filter for creditworthiness but also a psychological threshold for entrepreneurs. The paper argues that enhancing SME access to finance requires interventions that address these psychological and trust-based barriers, alongside traditional financial and technical support. Recommendations include designing client engagement strategies that reduce perceived intrusion and building institutional trust to convert psychological reluctance into cooperative transparency.

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