Banking stability and borrower discouragement: a multilevel analysis for SMEs in the EU-28

Ana Mol-Gómez-Vázquez; Ginés Hernández-Cánovas; Johanna Koëter-Kant

doi:10.1007/s11187-021-00457-w

Banking stability and borrower discouragement: a multilevel analysis for SMEs in the EU-28

Ana Mol-Gómez-Vázquez^*, Ginés Hernández-Cánovas, Johanna Koëter-Kant

^*Corresponding author for this work

Finance

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Abstract

The promotion of a more stable European banking system has become a priority which, not doubt, will bring important benefits to firms. However, bank stability comes with stronger regulations that could harm the access to finance of small and medium-sized enterprises (SMEs), which are highly dependent on bank financing. We provide new evidence on the association between the stability of a country’s banking system and SMEs access to finance through the study of borrower discouragement. We analyze 20,207 observations gathered among 16,382 firms operating in the EU-28 during the period 2011–2018. Applying multilevel methodology, our results show that SMEs operating in countries with more stable banking systems are less likely to be discouraged from applying for a loan. Working to achieve a more stable banking system does not seem to harm the access to finance of SMEs.

Original language	English
Pages (from-to)	1579-1593
Number of pages	15
Journal	Small Business Economics
Volume	58
Issue number	3
Early online date	30 Jan 2021
DOIs	https://doi.org/10.1007/s11187-021-00457-w
Publication status	Published - Mar 2022

Bibliographical note

Funding Information:
The authors acknowledge financial support from Agencia Estatal de Investigación ( https://doi.org/10.13039/501100011033 ), research project PID2019-106314GB-I00/AEI/10.13039/501100011033. We also acknowledge financial support from Fundación UCEIF and Santander Financial Institute (SANFI).

Publisher Copyright:
© 2021, The Author(s), under exclusive licence to Springer Science+Business Media, LLC part of Springer Nature.

Copyright:
Copyright 2021 Elsevier B.V., All rights reserved.

Funding

The authors acknowledge financial support from Agencia Estatal de Investigación ( https://doi.org/10.13039/501100011033 ), research project PID2019-106314GB-I00/AEI/10.13039/501100011033. We also acknowledge financial support from Fundación UCEIF and Santander Financial Institute (SANFI).

Funders	Funder number
Fundaci?n UCEIF
Fundación UCEIF
Santander Financial Institute
Agencia Estatal de Investigación	PID2019-106314GB-I00/AEI/10.13039/501100011033
Agencia Estatal de Investigación

Keywords

Financial constraints Z-score
Financial integration
Information asymmetries
Two-level model

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1007/s11187-021-00457-w

Banking stability and borrower discouragementFinal published version, 378 KBLicence: Article 25fa Dutch Copyright Act

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abstract = "The promotion of a more stable European banking system has become a priority which, not doubt, will bring important benefits to firms. However, bank stability comes with stronger regulations that could harm the access to finance of small and medium-sized enterprises (SMEs), which are highly dependent on bank financing. We provide new evidence on the association between the stability of a country{\textquoteright}s banking system and SMEs access to finance through the study of borrower discouragement. We analyze 20,207 observations gathered among 16,382 firms operating in the EU-28 during the period 2011–2018. Applying multilevel methodology, our results show that SMEs operating in countries with more stable banking systems are less likely to be discouraged from applying for a loan. Working to achieve a more stable banking system does not seem to harm the access to finance of SMEs.",

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Banking stability and borrower discouragement: a multilevel analysis for SMEs in the EU-28

Abstract

Bibliographical note

Funding

Keywords

UN SDGs

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