EconPapers    
Economics at your fingertips  
 

Bank lending constraints, trade credit and alternative financing during the financial crisis: Evidence from European SMEs

Eddie Casey () and Conor O'Toole ()

Journal of Corporate Finance, 2014, vol. 27, issue C, 173-193

Abstract: Using euro area firm-level data since the recent financial crisis, we test whether bank lending constrained small- and medium-sized enterprises (SMEs) are more likely to use or apply for alternative external finance including trade credit, informal lending, loans from other companies, market financing (issued debt or equity) and state grants. Our constraint indicators identify both credit-rationed firms and firms that self-ration due to high lending costs. We find that credit-rationed firms are more likely to use, and apply for, trade credit. This increases with firm size and age. We also find that constrained firms are more likely to use informal lending or loans from other companies but find no evidence that bank-constrained SMEs apply for, or use, market finance. Smaller, self-rationing borrowers are more likely to apply for grant finance. Finally, we find that firms denied credit for working capital tend to turn to trade credit, while informal and inter-company lending tends to act as a substitute for bank investment loans.

Keywords: Financial crisis; Credit constraints; Bank lending; Trade credit (search for similar items in EconPapers)
JEL-codes: G32 D22 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (63) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0929119914000534
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:27:y:2014:i:c:p:173-193

DOI: 10.1016/j.jcorpfin.2014.05.001

Access Statistics for this article

Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter

More articles in Journal of Corporate Finance from Elsevier
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-08-06
Handle: RePEc:eee:corfin:v:27:y:2014:i:c:p:173-193