"Investigating the Perceptions of Credit Constraints in the European Union"



The promotion and support of small and medium-sized enterprises (SMEs) forms an essential ingredient in policies to help improve Europe’s economic performance. A key issue in this context is whether SMEs face undue difficulty when trying to access credit. Using survey data from 2005 and 2006 covering almost 5,000 SMEs in the European Union, we investigate the determinants of firms’ perceived financing constraints, focusing on bank loans. It turns out that a firm’s age plays an important role in that older firms perceive external financing as being less difficult. Also, relationship banking helps to perceive an increased availability to credit. On the other hand, the ownership structure of a firm is not systematically related to perceived credit constraints, while turnover relaxes firms’ perceptions in the “new” EU 10 countries, but not in the “old” member states. There exist significant country differences and this cross-country variation can be partly explained by the degree of competition in the banking sector. It has to be stressed that these survey data having been collected well before the present economic crisis; the results here do not describe the present situation but rather the more structural elements of the relationship between perceived access to credit and the determinants studied in a normal economic situation.
strong>The Erasmus - EIM - Panteia Entrepreneurship Lectures Series is co-organized by Erasmus Research Institute of Management (ERIM.nl) and EIM Business & Policy Research (EIM/Panteia), an independent and international research and consultancy organisation, specialised in SMEs and EntrepreneurshipEIM is part of the Panteia group.
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Contact information:
Ingrid Verheul