Assessing the determinants of bank loan approvals for Moroccan SMEs: Evidence from an empirical study

Abstract

Access to bank financing remains a major challenge for small and medium-sized enterprises (SMEs), particularly in emerging economies marked by pronounced information asymmetries and heightened perceptions of risk. In this context, this article aims to identify the key determinants that shape banks’ decisions to grant or deny credit to Moroccan SMEs, with a particular focus on relational, financial, and structural dimensions. The study adopts a quantitative empirical approach. Data were collected from 200 Moroccan SMEs that submitted loan applications to three banks between 2015 and 2019. The findings highlight the central role of relational variables in credit approval decisions. The duration, intensity, and perceived satisfaction of the bank–SME relationship significantly increase the likelihood of obtaining a loan. SMEs satisfied with their banking relationship exhibit a probability of approval more than six times higher than dissatisfied firms, while a high-intensity relationship increases this likelihood by more than fourfold. By contrast, structural variables commonly emphasized in the literature, such as sector of activity, geographic location, or turnover, are not statistically significant. From a financial standpoint, the requested loan amount does not affect the decision, whereas the presence of tangible collateral, notably mortgages and firm assets, significantly improves approval prospects. These results underscore the growing importance of qualitative (soft) information and the customization of risk assessment in bank lending decisions. The study contributes to the relationship lending literature by providing empirical evidence from the Moroccan context and offers managerial and institutional implications for SME owners and managers, banks, and public policymakers seeking to improve access to finance.