When arm’s length is too far

Thorsten Beck, Hans Degryse, Ralph De Haas, Neeltje van Horen 25 July 2014

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In the wake of the global financial crisis, policymakers’ attention has focused on lending to small and medium-sized enterprises (SMEs) as these were among the most affected firms when the credit cycle turned. In the US, president Obama signed the Small Business Jobs Act in 2010, which authorised the creation of the Small Business Lending Fund Programme to increase the availability of credit for small businesses. In the UK, policymakers have put a lot of pressure on banks to increase, or at least not reduce, lending to SMEs – often seen as the backbone of the economy.

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Topics:  Financial markets

Tags:  bank lending, SMEs

Do all firms have equal access to external financing?

Neil Kay, Gavin Murphy, Conor O'Toole, Iulia Siedschlag, Brian O'Connell 29 June 2014

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The proportion of bank loan acceptances has fallen significantly following the crisis, along with the level of enterprise investment. The sharpest falls in both have been in countries hardest hit by the crisis. While in a number of countries – such as Finland, Malta, and Sweden – the declines have been modest, in others – such as in Bulgaria, Ireland, Denmark, Lithuania, Spain, and Greece – they have approached or exceeded 30%.

Figure 1. Percentage change in bank loan acceptances

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Topics:  EU policies Financial markets

Tags:  investment, lending, credit, Finance, SMEs, credit rationing, borrowing, information asymmetries

Why scarce small and medium enterprise financing hinders growth in Latin America: A role for public policies

Rolando Avendaño, Niels Boehm, Elisa Calza 27 January 2013

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Small and medium enterprises represent a significant share of emerging economies’ business fabric. Nevertheless, they continue to face multiple challenges in meeting their financing needs. Public financial institutions have come to play an active role in addressing these financing gaps through new operational mechanisms and adapted instruments.

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Topics:  Development

Tags:  Latin America, Finance, SMEs

Reinvigorating the trade policy agenda: Think supply chain!

Bernard Hoekman, Selina Jackson 23 January 2013

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International supply chains have become a fundamental feature of global commerce, with goods being processed – and value being added – in the multiple countries that are part of the chain.

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Topics:  Global governance International trade

Tags:  barriers to trade, SMEs, global supply chain, small and medium-sized enterprises

Foreigners vs. natives: Bank lending and loan pricing

Thorsten Beck, Vasso P. Ioannidou, Larissa Schäfer 13 July 2012

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The past two decades have seen a large increase in foreign bank entry across the globe. The increase in foreign bank participation has been especially strong in the transition countries of Central and Eastern Europe and Latin America, reaching well above 80% of the number of banks in several countries (Claessens et al. 2008). The effects of foreign bank participation on lending to small and medium enterprises (SMEs) have been a controversial issue among academics and policymakers alike.

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Topics:  Global crisis International finance

Tags:  foreign banks, SMEs, Bolivia

Recessions and small business access to credit: Lessons for Europe from interstate banking deregulation in the US

Mathias Hoffmann, Iryna Stewen 19 February 2012

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The European sovereign debt crisis is often viewed as a banking crisis in disguise (see, for instance, Mody and Sandri 2011 on this site). Policymakers are rightly concerned about the prospect that ever more cautious banks may eventually stop lending to small and medium-sized businesses (or enterprises, known as SMEs). While large firms can tap capital markets directly, SMEs are particularly bank dependent.

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Topics:  International finance

Tags:  recessions, credit, SMEs, banking deregulation

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