Discouraged Borrowers: Evidence for Eurozone SME's

JIFMIM, Forthcoming

21 Pages Posted: 6 Apr 2016

See all articles by Ciaran Mac an Bhaird

Ciaran Mac an Bhaird

Dublin City University

Brian M. Lucey

Trinity Business School, Trinity College Dublin; Abu Dhabi University - College of Business Administration; Shanghai Lixin Univeristy of Accounting and Finance

Javier Sánchez Vidal

Universidad Politecnica de Cartagena - Department of Economics, Accounting and Finance

Date Written: April 3, 2016

Abstract

This study examines the decision by firm owners not to apply for intermediated debt due to a perception that their application will be rejected for a sample of small firms in 9 European countries - these are “discouraged” borrowers. Compared with firms that applied for bank loans, discouraged borrowers are smaller, younger, have declining turnover and an increasing debt to assets ratio. Transmission of macro effects through the banking system and the economic environment also leads to higher levels of discouragement. Higher regulatory quality results in greater borrower discouragement, indicating the importance of regulation and enforcement mechanisms for the efficient functioning of private debt markets.

Keywords: SME, Discouraged Borrowers, ECB, SAFE, Eurozone Crisis, Entrepreneurial Finance

JEL Classification: G15, G32

Suggested Citation

Mac an Bhaird, Ciarán and Lucey, Brian M. and Sánchez Vidal, Javier, Discouraged Borrowers: Evidence for Eurozone SME's (April 3, 2016). JIFMIM, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2758338

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)

Abu Dhabi University - College of Business Administration ( email )

PO Box 59911
Abu Dhabi, Abu Dhabi 59911
United Arab Emirates

Shanghai Lixin Univeristy of Accounting and Finance ( email )

Shanghai
China

Javier Sánchez Vidal

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

Calle Real, 3
Cartagena, 30201
Spain

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
204
Abstract Views
1,651
Rank
318,256
PlumX Metrics