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Constraints On Bank Lending To Smes From Romania And Supportive Measures

Author

Listed:
  • Angela ROMAN

    () (”Alexandru Ioan Cuza” University of Iasi, Faculty of Economics and Business Administration)

  • Valentina Diana RUSU

    () (”Alexandru Ioan Cuza” University of Iasi, Faculty of Economics and Business Administration)

Abstract

The access to finance is indispensable for the efficient allocation of capital and the enterprise development. However, when compared with large enterprises, small and medium enterprises face many difficulties when pursuing to procure financial resources. In Romania, the financial system is focused on banks so bank loans have an overwhelming share from the resources of external finance for SMEs. However, these companies face many obstacles in terms of applying for bank loans. Thus, we may notice that some banks refuse to grant loans or increase interest rates for operational SMEs that do not offer adequate guarantees or do not have a credit history, because they have just started their activity or they have a degree of solvency that does not fall into the limits imposed by the banks in question. In crisis conditions, SMEs face increasing difficulties in contracting bank loans because the deteriorating macroeconomic environment and the uncertainty about the macroeconomic outlook causes banks to show a greater reluctance in lending to these enterprises. Our paper aims to highlight the main constraints faced by SMEs in accessing bank loans, the implications of the current crisis on SMEs' access to bank loans and the measures taken by public authorities to support bank lending to these enterprises.

Suggested Citation

  • Angela ROMAN & Valentina Diana RUSU, 2011. "Constraints On Bank Lending To Smes From Romania And Supportive Measures," EuroEconomica, Danubius University of Galati, issue 5(30), pages 21-38, December.
  • Handle: RePEc:dug:journl:y:2011:i:5:p:21-38
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    File URL: http://journals.univ-danubius.ro/index.php/euroeconomica/article/view/1137/954
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    References listed on IDEAS

    as
    1. de la Torre, Augusto & Martínez Pería, María Soledad & Schmukler, Sergio L., 2010. "Bank involvement with SMEs: Beyond relationship lending," Journal of Banking & Finance, Elsevier, vol. 34(9), pages 2280-2293, September.
    2. Beck, Thorsten & Demirguc-Kunt, Asli & Maksimovic, Vojislav, 2004. "Bank Competition and Access to Finance: International Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(3), pages 627-648, June.
    3. Mirjam Schiffer & Beatrice Weder, 2001. "Firm Size and the Business Environment : Worldwide Survey Results," World Bank Publications, The World Bank, number 13988, June.
    4. Beck, Thorsten & Demirguc-Kunt, Asli & Laeven, Luc & Maksimovic, Vojislav, 2006. "The determinants of financing obstacles," Journal of International Money and Finance, Elsevier, vol. 25(6), pages 932-952, October.
    5. Thorsten Beck & Asli Demirguc-Kunt, 2005. "Law and Firms' Access to Finance," American Law and Economics Review, Oxford University Press, vol. 7(1), pages 211-252.
    6. Thorsten Beck & Asli Demirguc-Kunt & Ross Levine, 2005. "SMEs, Growth, and Poverty: Cross-Country Evidence," Journal of Economic Growth, Springer, vol. 10(3), pages 199-229, September.
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