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The impact of credit availability on small and medium companies

Bogdan WÅ‚odarczyk (), Marek Szturo (), George H. Ionescu (), Daniela Firoiu (), Ramona Pirvu () and Roxana Badircea ()
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Bogdan WÅ‚odarczyk: University of Warmia and Mazury in Olsztyn, Poland
Marek Szturo: University of Warmia and Mazury in Olsztyn, Poland
George H. Ionescu: Romanian-American University, Romania
Daniela Firoiu: Romanian-American University, Romania
Ramona Pirvu: University of Craiova, Romania
Roxana Badircea: University of Craiova, Romania

Entrepreneurship and Sustainability Issues, 2018, vol. 5, issue 3, 565-580

Abstract: Existing research proves that companies' access to bank loans or other external sources of financing for business development is one of the defining factors of the survival and development of a company on the market. This is all the more important in the case of small and medium-sized companies, knowing that they face a series of difficulties in obtaining financing from banking institutions, especially due to an insufficient amount of information needed provided to banks and needed by them to analyze the opportunity for a loan. However, as the economic and financial conditions of a company are better, the more information is available to banks and the credit availability is higher. By this research we analyse the factors affecting the credit availability and their influence on development of Polish small and medium companies, such as company’s size and age, financial results or the length of relationship with the banking institution, as well as the features characterizing the banking sector. The results demonstrate that in Poland, similarly to other European countries, small and medium companies have a more limited access to credit availability than large companies. Moreover, a significant dependence of bank credit availability from the size of the company, liquidity, profitability and the situation in the banking sector was demonstrated.

Keywords: credit availability; Small and Medium-sized Enterprises (SMEs); banking sector (search for similar items in EconPapers)
JEL-codes: G21 G31 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.9770/jesi.2018.5.3(12)

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