Bank Financing and Credit Rationing of Australian SMEs

40 Pages Posted: 14 Feb 2014 Last revised: 26 Feb 2014

See all articles by Scott McCarthy

Scott McCarthy

University of Queensland - Faculty of Business, Economics and Law

Barry R. Oliver

University of Queensland - Business School; Financial Research Network (FIRN)

Martie‐Louise Verreynne

University of Queensland

Date Written: December 2, 2013

Abstract

This paper investigates two aspects of the demand side determinants of bank lending for a sample of Australian SMEs. Using data from the Growing Australian Business Survey we document the results on why a sample of Australian SMEs seek bank finance and bank credit rationing of loan applications. SMEs with growth intentions, business plans, larger firms and those in the agriculture industry are significantly more likely to seek finance. A significant interaction between business plans and size is also found. Firms that are older, in agriculture, with incremental product innovation, have 40% or more of export sales, and have a male CEO have a positive relation with loan application success. Generally, these factors are not significant in the decision to seek bank finance. Having business plans is not significantly related to the level of success in securing debt funds nor is the interaction between business plans and size.

Keywords: SME, bank finance, credit rationing

JEL Classification: G14, G21, G32

Suggested Citation

McCarthy, Scott and Oliver, Barry Ross and Verreynne, Martie‐Louise, Bank Financing and Credit Rationing of Australian SMEs (December 2, 2013). Asian Finance Association (AsianFA) 2014 Conference Paper. Available at SSRN: https://ssrn.com/abstract=2395020 or http://dx.doi.org/10.2139/ssrn.2395020

Scott McCarthy

University of Queensland - Faculty of Business, Economics and Law ( email )

4072 Brisbane, Queensland
Australia

Barry Ross Oliver (Contact Author)

University of Queensland - Business School ( email )

Brisbane, Queensland 4072
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Martie‐Louise Verreynne

University of Queensland ( email )

St Lucia
Brisbane, Queensland 4072
Australia

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