SMEs’ Access to Finance in the Euro Area: What Helps or Hampers?
31 Pages Posted: 3 Jun 2014
Date Written: May 2014
Abstract
The monetary transmission mechanism in the euro area has been adversely affected by the recent crises. Using survey data on thousands of euro area firms, we study factors that affect the access to finance of SMEs. We find that changes in bank funding costs and borrower leverage matter for firms’ access to finance. Increases in bank funding costs and borrowers’ debt-to-asset ratios are significantly and negatively associated with firms’ access to finance. The use of subsidies significantly improve access to finance of SMEs. Finally, access to finance is found to be positively related to firm size and firm age.
Keywords: Access to capital markets, Euro Area, Monetary transmission mechanism, Private sector, Credit, Borrowing, Banking sector, Monetary policy, access to finance, micro, small and medium sized enterprises, firm size, bank funding, access to bank, bank access, bank lending rates, sme, small firms, sme financing, banks ’ balance sheets, bank finance, transmission of monetary policy, bank interest rate, bank capital, bank balance sheets, banking relationships, firm sizes, retail bank, liquidity ratio, bank bonds, bank size, banking system, small loans, bank capitalization, bank for international settlements, bankers, sme lending, bank relationships, credit lines, banks ’ liabilities
JEL Classification: E44, E51, G01, G21
Suggested Citation: Suggested Citation