Young Enterprises and Bank Credit Denials
Mascia, Danilo V. | May 2018
Abstract
By employing a sample of 20,956 observations of non-financial SMEs headquartered in the Euro area, between 2009 and 2015, we test whether young businesses are more likely to face credit rejections from lenders than their older peers. Our findings appear to confirm our suspicions that new enterprises consistently experience higher denials from banks compared to more established businesses. Such a result is stable to different model specifications and is also confirmed once we handle the issue of sample selection bias potentially affecting our data. Additional tests also reveal that credit constraints are particularly difficult for young SMEs located in Southern and Central Europe, as well as for those operating in the “Trade” industry. Overall, our evidence suggests that actions from the policy maker could be desirable to support the viability of credit and, thus, ensure the growth of young businesses in the Euro area.
Citation
Mascia, Danilo V.. 2018. Young Enterprises and Bank Credit Denials. © Asian Development Bank Institute. http://hdl.handle.net/11540/8332.Keywords
Financial Stability
Financial Management System
Financial Restructuring
Capital Market Development
Market Development
Economics
Erosion
International Economics
Macroeconomic
Macroeconomic Analysis
Performance Evaluation
Impact Evaluation
Foreign and Domestic Financing
Foreign Direct Investment
International Financial Market
Multilateral Financial Institutions
Economic Recession
Market
Crisis
Economic indicators
Growth models
Gross domestic product
Macroeconomics
Economic forecast
Business Financing
Investment Requirements
Business recessions
Multilateral development banks
Regulatory reform
Capital
Exports
Economic development projects
Economic policy
Economic forecasting
Investment Requirements
Banks
International banks and banking
Capital movements
Central banks and banking
Bills of exchange
Swaps
Banks and banking
Financial crisis
Credit control
Credit allocation
Capital market
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