The financial vernerability of Irish Small and Medium Enterprises, 2013 to 2017

John McQuinn and Fergal McCann ()
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John McQuinn: Central Bank of Ireland

No 14/EL/17, Economic Letters from Central Bank of Ireland

Abstract: Ongoing assessments of the financial vulnerability of households and firms are an important part of the financial stability work agenda of the Central Bank. Constraints on the availability of firms’ balance sheet data have made such assessments difficult to carry out for Irish firms. In this Letter, Small and Medium Enterprise (SME) indebtedness as measured by the debt-to-turnover ratio is analysed from a representative sample of Irish SMEs over a period of four years to assess the evolution of financial vulnerability in a period of economic recovery. The data demonstrate that the share of highly indebted firms (those with debt exceeding turnover) has fallen from 7.8 per cent of SMEs to 2.9 per cent, with pockets of risk remaining in the Hotels and Restaurants sector. The share of Irish SMEs currently holding no debt has increased to a half, up from roughly one in four SMEs in September 2013.

Date: 2017-11
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