Banking stability and borrower discouragement: a multilevel analysis for SMEs in the EU-28

Ana Mol-Gómez-Vázquez (), Ginés Hernández-Cánovas () and Johanna Koëter-Kant ()
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Ana Mol-Gómez-Vázquez: Universidad de Alicante
Ginés Hernández-Cánovas: Universidad Politécnica de Cartagena
Johanna Koëter-Kant: Vrije Universiteit Amsterdam

Small Business Economics, 2022, vol. 58, issue 3, No 18, 1579-1593

Abstract: Abstract The promotion of a more stable European banking system has become a priority which, not doubt, will bring important benefits to firms. However, bank stability comes with stronger regulations that could harm the access to finance of small and medium-sized enterprises (SMEs), which are highly dependent on bank financing. We provide new evidence on the association between the stability of a country’s banking system and SMEs access to finance through the study of borrower discouragement. We analyze 20,207 observations gathered among 16,382 firms operating in the EU-28 during the period 2011–2018. Applying multilevel methodology, our results show that SMEs operating in countries with more stable banking systems are less likely to be discouraged from applying for a loan. Working to achieve a more stable banking system does not seem to harm the access to finance of SMEs.

Keywords: Financial constraints Z-score; Financial integration; Two-level model; Information asymmetries; G21; G30; G32; L26 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11187-021-00457-w

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