Bank-lending constraints and alternative financing during the financial crisis: Evidence from European SMEs
AbstractThe financial crisis has brought to the fore concerns regarding small- and medium-sized enterprises' (SMEs) capacity to access traditional bank lending. Using European firm-level data on SME access to finance since the onset of the financial crisis, we find that bank-lending constrained SMEs are significantly more likely to avail of alternative forms of external finance, controlling for firm-level and country-level characteristics. We then determine the implications that usage of alternative forms of finance can have for certain economically desirable business activities. In particular, we find that using alternative finance substantially reduces the likelihood of business fixed investment. This effect is not evident for business innovation.
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Bibliographic InfoPaper provided by Economic and Social Research Institute (ESRI) in its series Papers with number WP450.
Date of creation: Mar 2013
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-04-27 (All new papers)
- NEP-BAN-2013-04-27 (Banking)
- NEP-EEC-2013-04-27 (European Economics)
- NEP-ENT-2013-04-27 (Entrepreneurship)
- NEP-FMK-2013-04-27 (Financial Markets)
- NEP-SBM-2013-04-27 (Small Business Management)
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