The impact of loan financing on SME’s from transitional countries

Jens Hoelscher (), Peter Howard-Jones () and Allan Webster ()
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Jens Hoelscher: Bournemouth University, Executive Business Centre
Peter Howard-Jones: Bournemouth University, Executive Business Centre
Allan Webster: Bournemouth University, Executive Business Centre
Authors registered in the RePEc Author Service: Jens Hölscher

No BAFES01, BAFES Working Papers from Department of Accounting, Finance & Economic, Bournemouth University

Abstract: This study considers the impact of finance (loans) on the performance and productive efficiency of a sample of 8037 SMEs from transitional countries. An extensive macro-economic literature supports the importance of finance to growth. For this to be truly convincing it is necessary to show that firm performance is strengthened by loans. There are very few firm level studies of the linking loans and firm performance. This study extends the firm level literature using the 2013 BEEPS survey .It uses three different methodologies, all incorporating firm heterogeneity. Firstly, we use propensity score matching to test whether loans result in enhanced performance and finds that loans did indeed improve performance. Secondly, we re-enforce these conclusions using inverse probability weighted regression adjustment (IPWRA) analysis. Finally we employ a stochastic frontier approach to (a) measure firm inefficiency and (b) to show that loans create a statistically significant reduction in this inefficiency.

Keywords: SMEs; finance; transition; efficiency (search for similar items in EconPapers)
JEL-codes: G21 L25 P27 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2016-07
New Economics Papers: this item is included in nep-eff, nep-sog and nep-tra
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