What Determines the Decision to Apply for Credit? Evidence for Eurozone SMEs

21 Pages Posted: 4 Nov 2012

See all articles by Javier Sánchez Vidal

Javier Sánchez Vidal

Universidad Politecnica de Cartagena - Department of Economics, Accounting and Finance

Ciaran Mac an Bhaird

Dublin City University

Brian M. Lucey

Trinity Business School, Trinity College Dublin; Jiangxi University of Finance and Economics; Abu Dhabi University - College of Business Administration; Ho Chi Minh City University of Economics and Finance

Constantin Gurdgiev

Monfort College of Business, University of Northern Colorado; Trinity Business School, Trinity College, Dublin

Date Written: November 3, 2012

Abstract

This study examines the decision by firm owners to apply, or not, for intermediated debt. Based on a sample of SMEs in 9 European countries over the period 2009-2012, drawing on the ECB SAFE database, we examine firm characteristics, institutional and cultural factors. We focus our analyses on two distinct groups of firms, those that applied for debt and firms that did not apply for fear of rejection. We find evidence that firm age, size and existing debt capacity matter, as do bank and liquidity conditions. We provide evidence for the first time that national culture correlates to the decisions to apply or not for credit. Policy implications of these findings are discussed, with an emphasis on the current ongoing economic crisis.

Keywords: entrepreneurial finance, discouraged borrowers, intermediated debt, financial crisis, Europe, SME Finance

JEL Classification: G32, G3

Suggested Citation

Sánchez Vidal, Javier and Mac an Bhaird, Ciarán and Lucey, Brian M. and Gurdgiev, Constantin, What Determines the Decision to Apply for Credit? Evidence for Eurozone SMEs (November 3, 2012). Available at SSRN: https://ssrn.com/abstract=2170669 or http://dx.doi.org/10.2139/ssrn.2170669

Javier Sánchez Vidal

Universidad Politecnica de Cartagena - Department of Economics, Accounting and Finance ( email )

Calle Real, 3
Cartagena, 30201
Spain

Ciarán Mac an Bhaird

Dublin City University ( email )

Ireland 9
Dublin 9, leinster 9
Ireland

Brian M. Lucey (Contact Author)

Trinity Business School, Trinity College Dublin ( email )

The Sutherland Centre, Level 6, Arts Building
Dublin 2
Ireland
+353 1 608 1552 (Phone)
+353 1 679 9503 (Fax)

Jiangxi University of Finance and Economics ( email )

South Lushan Road
Nanchang, Jiangxi 330013
China

Abu Dhabi University - College of Business Administration ( email )

PO Box 59911
Abu Dhabi, Abu Dhabi 59911
United Arab Emirates

Ho Chi Minh City University of Economics and Finance ( email )

59C Nguyen Dình Chieu
6th Ward, District 3
Ho Chi Minh City, Ho Chi Minh 70000
Vietnam

Constantin Gurdgiev

Monfort College of Business, University of Northern Colorado ( email )

Kepner Hall
800 17th Street
Greeley, CO 80639
United States
80639 (Fax)

Trinity Business School, Trinity College, Dublin ( email )

Aras an Phiarsaigh
College Green
Dublin, Leinster D2
Ireland

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