SMEs’ financing: Divergence across Euro area countries?

Sébastien Roux () and Frédérique Savignac

Documents de Travail de l'Insee - INSEE Working Papers from Institut National de la Statistique et des Etudes Economiques

Abstract: This paper studies the divergence/convergence process of European countries as regard the financing behavior of small and medium sized enterprises. Using a firm level and country representative survey, we construct country-time indicators of SMEs’ use of three external financing sources: bank loans, credit line/overdraft and trade credit. These indicators account for composition effects and demand effects. We find substantial differences between countries in the SMEs’ use of the three financing sources. In particular, the cross-country differences related to SMEs’ use of bank loans have significantly increased over the period 2010-2014. This divergence is not related to a global increase in the volatility of this use between countries. Instead, it has been driven by a sharper increase (resp decrease) in the countries where SMEs’ use was initially higher (resp. lower). Finally, we investigate whether SMEs’ uses of financing sources are correlated at the country level with various macroeconomic and banking structure indicators. The results suggest that indicators about banking concentration are good candidates to explain the cross-country divergence of SMEs’ use of bank loans.

Keywords: credit constraints; bank financing; trade credit; institutional factors (search for similar items in EconPapers)
JEL-codes: C35 D22 G01 G31 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-eec, nep-ent and nep-fdg
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https://www.bnsp.insee.fr/ark:/12148/bc6p06zrftv/f1.pdf Document de travail de la DESE numéro G2018/01 (application/pdf)

Related works:
Working Paper: SMEs financing: Divergence across Euro area countries? (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:nse:doctra:g2018-01

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