Do Credit Constraints Affect SME Investment and Employment?

Petra Gerlach-Kristen, Brian O'Connell and Conor O'Toole
Additional contact information
Brian O'Connell: Indecon International Economic Consultants, Dublin

The Economic and Social Review, 2015, vol. 46, issue 1, 51-86

Abstract: This paper explores the potential presence of credit constraints confronting Irish SMEs and investigates the impact of these constraints on firms’ employment and investment. Using new survey data collected by the Department of Finance, we define firms as credit rationed or discouraged borrowers and link these constraints to employment and the propensity to invest. We find a negative and significant effect of SME credit constraints on employment for firms that are discouraged from applying for credit. We also find a negative effect of constraints on the probability of an SME investing. This effect is driven by firms who are credit rationed when seeking capacity expansion loans.

Keywords: credit; SMEs; investment; employment; Ireland (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
https://www.esr.ie/article/view/291/103 (application/pdf)

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:eso:journl:v:46:y:2015:i:1:p:51-86

Access Statistics for this article

More articles in The Economic and Social Review from Economic and Social Studies
Bibliographic data for series maintained by Aedin Doris ().