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The SME-lender relationship network in Ireland

Edward Gaffney and Niall McGeever
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Edward Gaffney: Central Bank of Ireland
Niall McGeever: Central Bank of Ireland

No 14/FS/22, Financial Stability Notes from Central Bank of Ireland

Abstract: In this Note, we examine the relationship between non-bank lenders and Irish small and medium enterprises (SMEs). We review the relevance of non-bank lending to financial stability. We then describe the SME-lender relationship network in Ireland. We find that 36 per cent of SME company borrowers owe money to a non-bank lender, with 15 per cent borrowing exclusively from nonbanks and 21 per cent borrowing from both banks and non-banks. We also show that 71 per cent of borrowers have only one lender. Finally, we characterise the firms that rely on non-bank lenders for credit. We find that SMEs that borrow from non-banks are younger, less liquid, and have higher leverage than SMEs that borrow from banks.

Date: 2022-11
New Economics Papers: this item is included in nep-cfn, nep-ent, nep-fdg, nep-mfd, nep-mon and nep-sbm
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