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Euro Area SMEs under Financial Constraints: Belief or Reality?

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  • Concha Artola
  • Veronique Genre
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    Abstract

    During the recent financial crisis, euro area firms, and especially Small and Medium-sized Enterprises, have been reporting acute problems of access to external finance. Using firm-level replies to the SME survey on access to finance, we use two indicators of financing constraints based on perceptions on the one side and on experienced financing constraints on the other and run probit and multinomial regressions model to determine which firms’, sectoral or national characteristics drove perceptions and experienced financial constraints during the recent financial turmoil. We find that perceptions of financing crunch was broadly based across firms but those firms who really experienced a credit crunch tended to be small and young, confirming the fact that SMEs tend to suffer more when credit standards are tightened.

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    Bibliographic Info

    Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3650.

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    Date of creation: 2011
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    Handle: RePEc:ces:ceswps:_3650

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    Related research

    Keywords: financial crisis; financing constraints; credit rationing; small and medium-sized enterprises; survey data;

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    References

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    1. Bougheas, Spiros & Mizen, Paul & Yalcin, Cihan, 2006. "Access to external finance: Theory and evidence on the impact of monetary policy and firm-specific characteristics," Journal of Banking & Finance, Elsevier, Elsevier, vol. 30(1), pages 199-227, January.
    2. Mishkin, Frederic S, 1994. "Preventing Financial Crises: An International Perspective," The Manchester School of Economic & Social Studies, University of Manchester, University of Manchester, vol. 62(0), pages 1-40, Suppl..
    3. Michael Devereux & Fabio Schiantarelli, 1989. "Investment, Finacial Factors and Cash Flow: Evidence From UK Panel Data," NBER Working Papers 3116, National Bureau of Economic Research, Inc.
    4. Thorsten Beck, 2004. "The determinants of financing obstacles," Policy Research Working Paper Series 3204, The World Bank.
    5. Eric Bartelsman & Stefano Scarpetta & Fabiano Schivardi, 2003. "Comparative Analysis of Firm Demographics and Survival: Micro-Level Evidence for the OECD Countries," OECD Economics Department Working Papers 348, OECD Publishing.
    6. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, Elsevier, vol. 32(3), pages 385-397, August.
    7. Maarten L. Buis, 2010. "Stata tip 87: Interpretation of interactions in nonlinear models," Stata Journal, StataCorp LP, StataCorp LP, vol. 10(2), pages 305-308, June.
    8. Philippe Aghion & Thibault Fally & Stefano Scarpetta, 2007. "Credit constraints as a barrier to the entry and post-entry growth of firms," Economic Policy, CEPR;CES;MSH, CEPR;CES;MSH, vol. 22, pages 731-779, October.
    9. Harrison, Ann E. & McMillan, Margaret S., 2003. "Does direct foreign investment affect domestic credit constraints?," Journal of International Economics, Elsevier, Elsevier, vol. 61(1), pages 73-100, October.
    10. Edward C. Norton & Hua Wang & Chunrong Ai, 2004. "Computing interaction effects and standard errors in logit and probit models," Stata Journal, StataCorp LP, StataCorp LP, vol. 4(2), pages 154-167, June.
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    Cited by:
    1. Paloma López-García & José Manuel Montero & Enrique Moral-Benito, 2012. "Business cycles and investment in intangibles: evidence from Spanish firms," Banco de Espa�a Working Papers 1219, Banco de Espa�a.

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