IDEAS home Printed from https://ideas.repec.org/a/taf/ujbmxx/v58y2020i3p648-668.html
   My bibliography  Save this article

The price of a disadvantaged location: Regional variation in the price and supply of short-term credit to SMEs in the UK

Author

Listed:
  • Marc Cowling
  • Neil Lee
  • Elisa Ughetto

Abstract

Access to inexpensive short-term credit from banks is vital for many small and medium enterprises (SMEs), which face liquidity problems because of an imbalance between cash outflows and receipt of outstanding payments. This article investigates the key determinants of short-term credit access and pricing for UK SMEs, disentangling between regional effects and firm-specific effects (that is, credit risk ratings). We use a large dataset of 30,183 responses to six waves of the SME Finance Monitor survey. While there are underlying differences at the firm level in risk behavior across regions, our key finding is that, faced with the same risk, banks do react fairly to funding applications in terms of access but not price at the regional level. We conclude that regional differences directly and indirectly affect the way banks allocate and price short-term credit. There is evidence of a peripheral region price penalty.

Suggested Citation

  • Marc Cowling & Neil Lee & Elisa Ughetto, 2020. "The price of a disadvantaged location: Regional variation in the price and supply of short-term credit to SMEs in the UK," Journal of Small Business Management, Taylor & Francis Journals, vol. 58(3), pages 648-668, May.
    • Handle: RePEc:taf:ujbmxx:v:58:y:2020:i:3:p:648-668
    DOI: 10.1080/00472778.2019.1681195
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00472778.2019.1681195
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00472778.2019.1681195?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Anna Stansbury & Dan Turner & Ed Balls, 2023. "Tackling the UK’s regional economic inequality: binding constraints and avenues for policy intervention," Contemporary Social Science, Taylor & Francis Journals, vol. 18(3-4), pages 318-356, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:ujbmxx:v:58:y:2020:i:3:p:648-668. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/ujbm .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.