Sovereign Stress, Unconventional Monetary Policy, and SME Access to Finance

60 Pages Posted: 10 Jul 2015

See all articles by Annalisa Ferrando

Annalisa Ferrando

European Central Bank (ECB)

Alexander A. Popov

European Central Bank (ECB)

Gregory F. Udell

Indiana University - Kelley School of Business - Department of Finance

Date Written: July 9, 2015

Abstract

We investigate the effect of sovereign stress and of unconventional monetary policy on small firms’ financing patterns during the euro area debt crisis. We find that after the crisis started, firms in stressed countries were more likely to be credit rationed, both in the quantity and in the price dimension, and to increase their use of debt securities. We also find evidence that the announcement of the ECB’s Outright Monetary Transactions Program was followed by an immediate decline in the share of credit rationed firms and of firms discouraged from applying. In addition, firms reduced their use of debt securities, trade credit, and government subsidized loans. Firms with improved outlook and credit history were particularly likely to benefit from easier credit access.

Keywords: Sovereign debt, unconventional monetary policy, credit access, SMEs

JEL Classification: D22, E58, G21, H63

Suggested Citation

Ferrando, Annalisa and Popov, Alexander A. and Udell, Gregory F., Sovereign Stress, Unconventional Monetary Policy, and SME Access to Finance (July 9, 2015). ECB Working Paper No. 1820, Available at SSRN: https://ssrn.com/abstract=2628738 or http://dx.doi.org/10.2139/ssrn.2628738

Annalisa Ferrando

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Alexander A. Popov (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Gregory F. Udell

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States

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