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Credit Access for Small and Medium Firms: Survey Evidence for Ireland

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  • Lawless, Martina

    (Central Bank of Ireland)

  • McCann, Fergal

    (Central Bank of Ireland)

Abstract

The extension of credit to SMEs in Ireland has been identified as a necessary condition for economic recovery and job growth. The debate on whether the reduction in credit to this sector is caused by credit rationing by banks or a lack of credit demand on the part of SMEs has received much attention in media and policy circles. Owing to a lack of relevant available micro-data, research on this issue in Ireland has been sparse to date. The aim of this paper is to provide evidence using recently available firm-level data from the Central Statistics Office and the European Central Bank. Using the CSO data, we find a moderate decline in credit applications, coupled with a very large increase in credit rejection rates. Using firm-level production data, we find no evidence that the accepted firms have been pooled according to firm performance - more productive and fast-growing firms are as likely to be rejected as any other firm. Using the ECB data, we show that Irish firms are 15 to 18 percent more likely to be rejected for credit than a comparable Eurozone SME. We show also that Irish firms are less likely to have had decreased credit demand than other Eurozone SMEs in the 2009-10 period.

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Bibliographic Info

Paper provided by Central Bank of Ireland in its series Research Technical Papers with number 11/RT/11.

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Date of creation: Nov 2011
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Handle: RePEc:cbi:wpaper:11/rt/11

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  1. Oecd, 2006. "The SME Financing Gap: Theory and Evidence," Financial Market Trends, OECD Publishing, vol. 2006(2), pages 89-97.
  2. Edwin Leuven & Barbara Sianesi, 2003. "PSMATCH2: Stata module to perform full Mahalanobis and propensity score matching, common support graphing, and covariate imbalance testing," Statistical Software Components S432001, Boston College Department of Economics, revised 12 Feb 2014.
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Cited by:
  1. O'Toole, Conor & Gerlach, Petra & O'Connell, Brian, 2013. "Measuring Credit Constraints for Irish SMEs," Research Notes RN2013/1/3, Economic and Social Research Institute (ESRI).
  2. Gerlach, Petra & O'Connell, Brian & O'Toole, Conor, 2013. "SME Credit Constraints and Macroeconomic Effects," Papers WP467, Economic and Social Research Institute (ESRI).
  3. McCann, Fergal & McIndoe-Calder, 2012. "Bank Competition Through The Credit Cycle: Implications For SME Financing," Economic Letters 04/EL/12, Central Bank of Ireland.
  4. Cussen, Mary & O'Leary, Brídín, 2013. "Why are Irish Non-Financial Corporations so Indebted?," Quarterly Bulletin Articles, Central Bank of Ireland, pages 104-118, January.
  5. Holton, Sarah & McCann, Fergal, 2012. "Irish SME credit supply and demand: comparisons across surveys and countries," Economic Letters 08/EL/12, Central Bank of Ireland.
  6. Lawless, Martina & McCann, Fergal, 2012. "The Irish SME lending market - a snapshot, December 2010," Economic Letters 03/EL/12, Central Bank of Ireland.

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