Access to credit amongst SMEs: Pre and post-crisis evidence from Eastern Europe
AbstractGiven the imminent re-structuring of the Irish banking sector, an issue of substantial policy importance is that of access to credit for Small and Medium-sized Enterprises (SMEs). As a compliment to ongoing efforts to improve our knowledge of this area using Irish firm-level data, we turn to Eastern Europe in an attempt to understand the effect of the crisis on firms’ credit access. Having matched countries from this sample to Ireland on the basis of the evolution of key macro variables between 2005 and 2009, we show how firm-level credit access has been significantly hampered using firm-level data from the World Bank and the European Bank for Reconstruction and Development. The results present a worrying picture, with the percentage of firms suffering from adverse credit conditions increasing significantly in Latvia and Estonia, the two countries with the most similar macro pattern to Ireland over the period of interest. We show using matching techniques that a firm in 2009 is 15% more likely to be credit constrained than a near-identical firm in 2005. We provide suggestive evidence that this is a result of credit rationing rather than an improvement in prudential lending practices in the banking sector.
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Bibliographic InfoPaper provided by Central Bank of Ireland in its series Economic Letters with number 03/EL/11.
Date of creation: May 2011
Date of revision:
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- Maria Bas & Antoine Berthou, 2011.
"The Decision to Import Capital Goods in India: Firms' Financial Factors Matter,"
2011-06, CEPII research center.
- Maria Bas & Antoine Berthou, 2012. "The Decision to Import Capital Goods in India: Firms' Financial Factors Matter," World Bank Economic Review, World Bank Group, vol. 26(3), pages 486-513.
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