What Determines the Decision to Apply for Credit? Evidence for Eurozone SMEs

21 Pages Posted: 4 Nov 2012  

Javier Sánchez Vidal

Universidad Politecnica de Cartagena - Department of Finance and Accounting

Ciaran Mac an Bhaird

Dublin City University

Brian M. Lucey

Trinity Business School, Trinity College Dublin; University of Sydney Business School

Constantin Gurdgiev

Trinity College, Dublin; Middlebury Institute of International Studies at Monterey (MIIS)

Date Written: November 3, 2012

Abstract

This study examines the decision by firm owners to apply, or not, for intermediated debt. Based on a sample of SMEs in 9 European countries over the period 2009-2012, drawing on the ECB SAFE database, we examine firm characteristics, institutional and cultural factors. We focus our analyses on two distinct groups of firms, those that applied for debt and firms that did not apply for fear of rejection. We find evidence that firm age, size and existing debt capacity matter, as do bank and liquidity conditions. We provide evidence for the first time that national culture correlates to the decisions to apply or not for credit. Policy implications of these findings are discussed, with an emphasis on the current ongoing economic crisis.

Keywords: entrepreneurial finance, discouraged borrowers, intermediated debt, financial crisis, Europe, SME Finance

JEL Classification: G32, G3

Suggested Citation

Sánchez Vidal, Javier and Mac an Bhaird, Ciarán and Lucey, Brian M. and Gurdgiev, Constantin, What Determines the Decision to Apply for Credit? Evidence for Eurozone SMEs (November 3, 2012). Available at SSRN: https://ssrn.com/abstract=2170669 or http://dx.doi.org/10.2139/ssrn.2170669

Javier Sánchez Vidal

Universidad Politecnica de Cartagena - Department of Finance and Accounting ( email )

Cartagena, 30201
Spain

Ciarán Mac an Bhaird

Dublin City University ( email )

Ireland 9
Dublin 9, leinster 9
Ireland

Brian M. Lucey (Contact Author)

Trinity Business School, Trinity College Dublin ( email )

The Sutherland Centre, Level 6, Arts Building
Dublin 2
Ireland
+353 1 608 1552 (Phone)
+353 1 679 9503 (Fax)

University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
Australia

Constantin Gurdgiev

Trinity College, Dublin ( email )

Trinity College
Dublin 2

Middlebury Institute of International Studies at Monterey (MIIS) ( email )

460 Pierce St
Monterey, CA 93940
United States

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