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Non-bank debt financing for SMEs: The role of securitisation, private placements and bonds

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  • Iota Kaousar Nassr
  • Gert Wehinger

Abstract

Reducing bank dependence in financing small-and medium-sized enterprises (SMEs) that are key contributors to economic growth and job creation should help making them more resilient to financial shocks. Various non-bank debt financing alternatives are available and were the focus of a Roundtable discussion that this article draws on. Revitalising securitisation, tarnished during the crisis, is important, by making it safer, simpler and more transparent, and perhaps also by offering some (initial) government and regulatory support. Similarly, covered bonds can be attractive instruments for SME finance. For mid-sized companies, bond issuance and private placements may also provide useful alternatives. All these instruments can and should be tailored to fit the investors’ needs. There is no “silver bullet” for SME finance which is exceptionally complex due to the diversity of SMEs themselves. Data transparency, standardisation, regulatory support and raising awareness about available financing options should be among the issues to be addressed. JEL classification: G1, G2, G23, G28 Keywords: SME finance, non-bank finance, (high-quality) securitisation, asset-backed securities (ABS), SME CLO (collateralised loan obligation), (covered) bonds, private placements, European DataWarehouse, Prime Collateralised Securities (PCS) initiative.

Suggested Citation

  • Iota Kaousar Nassr & Gert Wehinger, 2014. "Non-bank debt financing for SMEs: The role of securitisation, private placements and bonds," OECD Journal: Financial Market Trends, OECD Publishing, vol. 2014(1), pages 139-162.
  • Handle: RePEc:oec:dafkad:5jxx05svvw34
    DOI: 10.1787/fmt-2014-5jxx05svvw34
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    Citations

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    Cited by:

    1. Kraemer-Eis, Helmut & Battazzi, Francesco & Charrier, Remi & Natoli, Marco & Squilloni, Matteo, 2014. "Institutional non bank lending and the role of debt funds," EIF Working Paper Series 2014/25, European Investment Fund (EIF).
    2. Chen, Baohua & Zhang, Chunlian & Saydaliev, Hayot Berk, 2022. "Does bank complexity during the COVID-19 crisis alter the financing mechanism for small and medium-sized enterprises?," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 705-715.
    3. Helmut Elsinger & Robert Köck & Marcel Kropp & Walter Waschiczek, 2016. "Corporate financing in Austria in the run-up to capital markets union (This study is also available in German)," Financial Stability Report, Oesterreichische Nationalbank (Austrian Central Bank), issue 31, pages 96-119.
    4. Troilo, Michael & Walkup, Brian R. & Abe, Masato & Lee, Seulki, 2019. "Legal systems and the financing of working capital," International Review of Economics & Finance, Elsevier, vol. 64(C), pages 641-656.
    5. Sam Langfield & Marco Pagano, 2016. "Bank bias in Europe: effects on systemic risk and growth," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 31(85), pages 51-106.
    6. Stanley Sachikonye & Mabutho Sibanda, 2016. "An Assessment of SMEs’ Financing by Commercial Banks in Zimbabwe," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 12(6), pages 213-224, DECEMBER.

    More about this item

    Keywords

    sme finance; non-bank finance; (high-quality) securitisation; asset-backed securities (abs); sme clo (collateralised loan obligation); (covered) bonds; private placements; european datawarehouse; prime collateralised securities (pcs) initiative.;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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