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What determines the decision to apply for credit? Evidence for Eurozone SMEs

Author

Listed:
  • Brian Lucey

    () (Institute for International Integration Studies, Trinity College Dublin)

  • Javier Sánchez-Vidal

    () (Universidad de Cartagena)

  • Ciaran MacAnBhaird

    () (FIONTAR, Dublin City University)

  • Constantin Gurdgiev

    () (Institute for International Integration Studies, Trinity College Dublin)

Abstract

This study examines the decision by firm owners to apply, or not, for intermediated debt. Based on a sample of SMEs in 9 European countries over the period 2009-2012, we examine firm characteristics, institutional and cultural factors. We focus our analyses on two distinct groups of firms, those that applied for debt and firms that did not apply for fear of rejection. We find evidence that firm age, size and existing debt capacity matter, as do bank and liquidity conditions. We provide evidence for the first time that national culture correlates to the decisions to apply or not for credit. Policy implications of these findings are discussed, with an emphasis on the current ongoing economic crisis.

Suggested Citation

  • Brian Lucey & Javier Sánchez-Vidal & Ciaran MacAnBhaird & Constantin Gurdgiev, 2012. "What determines the decision to apply for credit? Evidence for Eurozone SMEs," The Institute for International Integration Studies Discussion Paper Series iiisdp415, IIIS.
  • Handle: RePEc:iis:dispap:iiisdp415
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    Cited by:

    1. Szabó, Zsolt, 2019. "Elbátortalanodott hiteligénylők a vállalati szektorban [Discouraged borrowers in the corporate sector]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1145-1186.
    2. Dirk Engel & Joel Stiebale, 2014. "Private equity, investment and financial constraints: firm-level evidence for France and the United Kingdom," Small Business Economics, Springer, vol. 43(1), pages 197-212, June.
    3. Drakos, Konstantinos & Giannakopoulos, Nicholas, 2018. "Self and bank credit rationing: a trivariate probit with double selection," Research in International Business and Finance, Elsevier, vol. 44(C), pages 124-134.

    More about this item

    Keywords

    Entrepreneurial finance; Discouraged borrowers; Intermediated debt; Financial crisis; Europe;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance

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