IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Firm Credit in Europe: A Tale of Three Crises

  • Holton, Sarah

    (Central Bank of Ireland)

  • Lawless, Martina

    (Central Bank of Ireland)

  • McCann, Fergal

    (Central Bank of Ireland)

This paper analyses the effects of the recent euro area economic, financial and debt crisis on SMEs’ access to bank finance. We use a survey on access to finance of SMEs in the euro area carried out by the European Central Bank during 2009 and 2010 to examine the impact of macroeconomic factors on developments in loan applications and approvals as well as changes in credit terms and conditions. At the country level, we identify three distinct aspects of the recent crisis in Europe affecting firm credit through different channels. A weak real economy is found to affect the demand for bank financ- ing. Financial conditions (proxied by the median credit default swap for banks in each country and sovereign yields) predominantly affect the probability of loan rejection and the terms and conditions of credit rather than the demand for credit. We interpret this as evidence of a bank balance sheet channel negatively impacting credit provision. Crucially, the level of debt overhang affects all aspects of SME financing, with suggestive evidence that the effect on credit rejection operates through the bank balance sheet channel, as opposed to being due to the borrower balance sheet.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.centralbank.ie/publications/Documents/04RT12.pdf
Download Restriction: no

Paper provided by Central Bank of Ireland in its series Research Technical Papers with number 04/RT/12.

as
in new window

Length:
Date of creation: Jul 2012
Date of revision:
Handle: RePEc:cbi:wpaper:04/rt/12
Contact details of provider: Postal: P.O. Box No. 559, Dame Street, Dublin 2
Phone: (01) 671 6666
Fax: (01) 671 6561
Web page: http://www.centralbank.ie
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
  2. Del Giovane, Paolo & Eramo, Ginette & Nobili, Andrea, 2011. "Disentangling demand and supply in credit developments: A survey-based analysis for Italy," Journal of Banking & Finance, Elsevier, vol. 35(10), pages 2719-2732, October.
  3. Ugo Albertazzi & Domenico J. Marchetti, 2010. "Credit supply, flight to quality and evergreening: an analysis of bank-firm relationships after Lehman," Temi di discussione (Economic working papers) 756, Bank of Italy, Economic Research and International Relations Area.
  4. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "This Time Is Different: Eight Centuries of Financial Folly," Economics Books, Princeton University Press, edition 1, volume 1, number 8973.
  5. Ciccarelli, Matteo & Peydró, José-Luis & Maddaloni, Angela, 2010. "Trusting the bankers: a new look at the credit channel of monetary policy," Working Paper Series 1228, European Central Bank.
  6. Jimenez Porras, G. & Ongena, S. & Peydro, J.L. & Saurina, J., 2012. "Credit Supply versus Demand : Bank and Firm Balance-Sheet Channels in Good and Crisis Times," Discussion Paper 2012-005, Tilburg University, Center for Economic Research.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:cbi:wpaper:04/rt/12. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Richard Smith)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.