UK credit and discouragement during the GFC
Marc Cowling (),
Maria Minniti and
Ning Zhang ()
Additional contact information
Weixi Liu: University of Bath School of Management
Maria Minniti: Syracuse University Whitman School of Management
Small Business Economics, 2016, vol. 47, issue 4, No 12, 1049-1074
Abstract The availability of credit to entrepreneurs with good investment opportunities is an important facilitator of economic growth. Under normal economic conditions, most entrepreneurs who requested loans receive them. In a global financial crisis, popular opinion is that banks are severely restricting lending to smaller businesses. This assumes that low levels of investment are caused by supply-side restrictions in the credit market. Little is said about potential changes in the demand for credit and how it is influenced by entrepreneurs’ perceptions about supply-side restrictions. One particularly interesting, and under-researched, group of small businesses is that who have potentially good investment opportunities, but are discouraged from applying for external funding as they fear rejection. In this study, we question whether these entrepreneurs were correct in their assumptions. We find that levels of discouragement are quite low in general at 2.7 % of the total smaller business population. Further analysis implies that 55.6 % of discouraged borrowers would have got loans had they applied.
Keywords: Small business finance; Credit rationing; Credit discouragement; Bank lending; L26; G21; D82; D52 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s11187-016-9745-6 Abstract (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:sbusec:v:47:y:2016:i:4:d:10.1007_s11187-016-9745-6
Ordering information: This journal article can be ordered from
http://www.springer. ... 29/journal/11187/PS2
Access Statistics for this article
Small Business Economics is currently edited by Zoltan J. Acs and David B. Audretsch
More articles in Small Business Economics from Springer
Bibliographic data for series maintained by Sonal Shukla ().