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Euro Area SMEs under Financial Constraints: Belief or Reality?

  • Concha Artola
  • Veronique Genre
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    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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    File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2011/wp-cesifo-2011-11/cesifo1_wp3650.pdf
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    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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    1. Thorsten Beck, 2004. "The determinants of financing obstacles," Policy Research Working Paper Series 3204, The World Bank.
    2. Frederic S. Mishkin, 1994. "Preventing Financial Crises: An International Perspective," NBER Working Papers 4636, National Bureau of Economic Research, Inc.
    3. 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, vol. 30(1), pages 199-227, January.
    4. Harrison, Ann E. & McMillan, Margaret S., 2003. "Does direct foreign investment affect domestic credit constraints?," Journal of International Economics, Elsevier, vol. 61(1), pages 73-100, October.
    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. Bernanke, Ben & Gertler, Mark, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Working Papers 95-15, C.V. Starr Center for Applied Economics, New York University.
    7. Aghion, Philippe & Fally, Thibault & Scarpetta, Stefano, 2007. "Credit Constraints as a Barrier to the Entry and Post-Entry Growth of Firms," IZA Discussion Papers 3237, Institute for the Study of Labor (IZA).
    8. Michael Devereux & Fabio Schiantarelli, 1990. "Investment, Financial Factors, and Cash Flow: Evidence from U.K. Panel Data," NBER Chapters, in: Asymmetric Information, Corporate Finance, and Investment, pages 279-306 National Bureau of Economic Research, Inc.
    9. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
    10. Edward C. Norton & Hua Wang & Chunrong Ai, 2004. "Computing interaction effects and standard errors in logit and probit models," Stata Journal, StataCorp LP, vol. 4(2), pages 154-167, June.
    11. Maarten L. Buis, 2010. "Stata tip 87: Interpretation of interactions in nonlinear models," Stata Journal, StataCorp LP, vol. 10(2), pages 305-308, June.
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