Credit Rationing in European SMEs and their Lending Infrastructure

Andrea Mc Namara () and Pierluigi Murro
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Andrea Mc Namara: National University of Ireland

No 1803, Working Papers CASMEF from Dipartimento di Economia e Finanza, LUISS Guido Carli

Abstract: We examine the influence of countries lending infrastructure on credit rationing for European SMEs. This lending infrastructure is comprised of countries information, legal, judicial, bankruptcy, social and regulatory environments. Using a sample of 13,957 SMEs from eleven European countries, we find that SMEs in countries in which there is greater information sharing, fewer legal rights, a more efficient judicial system and less efficient bankruptcy system are less likely to be credit rationed. Moreover, an efficient bankruptcy regime is more important for larger and more risky firms in reducing the likehood of they being credit rationed. Equally the impact of banks regulatory regime varies across firm riskiness; a stricter regime results in a greater likehood of credit rationing for more risky or finally weaker firms in contrast to stronger firms where less regulation sees more rationing.

Keywords: SMEs; Lending Infrastracture; Credit Constraints. (search for similar items in EconPapers)
JEL-codes: G20 G28 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-ban, nep-bec, nep-cfn, nep-eec and nep-ent
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Citations: View citations in EconPapers (1)

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