SME Credit Conditions in the Pandemic Recovery

Elena Durante and Niall McGeever
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Elena Durante: Central Bank of Ireland
Niall McGeever: Central Bank of Ireland

No 2/FS/22, Financial Stability Notes from Central Bank of Ireland

Abstract: We analyse the credit conditions facing Irish SMEs in the context of the pandemic recovery. SME trading performance has continued to improve, with turnover and profitability indicators rebounding significantly from pandemic lows. Government policy supports have been large and composed mainly of grants. These supports have provided extensive liquidity support to firms and mitigated debt overhang risks, while also likely weighing on demand in the formal credit market. New bank lending to SMEs has fallen moderately and this has been mainly driven by declines in lending to pandemic-affected sectors. SME demand for credit remains low. Credit supply indicators show little sign of stress, with loan application rejection rates remaining steady. The tapering of government supports to businesses may result in a rise in credit demand over the coming months.

Date: 2022-04
New Economics Papers: this item is included in nep-ent and nep-sbm
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