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Are Firms from European Union Financially-Stressed Countries More Credit Constrained?

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  • Dumitru Ionuţ

    (Bucharest University of Economic Studies, Bucharest, Romania)

  • Dumitru Ionela

    (Bucharest University of Economic Studies, Bucharest, Romania)

Abstract

Using a large microdata database from the European Commission and European Central Bank survey (Survey on Access to Finance of Enterprises), we investigate in this paper what factors are playing a significant role in explaining why companies from European Union are credit constrained, and if the firms from financially stressed countries are more credit constrained. We found that smaller companies are more likely to be more credit constrained than larger companies in all our estimated models. The impact of the age of the firm on credit access is found to be mixed. A positive performance in terms of profitability seems to come hand in hand with a lower likelihood of being credit constraints. A deterioration of the outlook of the firm in terms of sales and profitability or business plan there will trigger a higher likelihood of being credit constrained, the impact being stronger for stressed economies. Not in the last, the access to public financial support, including guarantees, has a “grease” effect on access to bank loans, reducing the probability of being credit constrained, the positive impact being stronger in stressed countries.

Suggested Citation

  • Dumitru Ionuţ & Dumitru Ionela, 2024. "Are Firms from European Union Financially-Stressed Countries More Credit Constrained?," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 18(1), pages 120-129.
    • Handle: RePEc:vrs:poicbe:v:18:y:2024:i:1:p:120-129:n:1003
    DOI: 10.2478/picbe-2024-0010
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    References listed on IDEAS

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    1. Martin Brown & Steven Ongena & Alexander Popov & Pinar Yeşin, 2011. "Who needs credit and who gets credit in Eastern Europe? [Interaction terms in logit and probit models]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 26(65), pages 93-130.
    2. Holton, Sarah & Lawless, Martina & McCann, Fergal, 2013. "SME Financing Conditions in Europe: Credit Crunch or Fundamentals?," National Institute Economic Review, National Institute of Economic and Social Research, vol. 225, pages 52-67, August.
    3. Pigini, Claudia & Presbitero, Andrea F. & Zazzaro, Alberto, 2016. "State dependence in access to credit," Journal of Financial Stability, Elsevier, vol. 27(C), pages 17-34.
    4. Mac an Bhaird, Ciarán & Vidal, Javier Sanchez & Lucey, Brian, 2016. "Discouraged borrowers: Evidence for Eurozone SMEs," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 44(C), pages 46-55.
    5. Jiménez, Gabriel & Ongena, Steven & Peydró, José-Luis & Saurina, Jesús, 2017. "Do Demand or Supply Factors Drive Bank Credit, in Good and Crisis Times?," EconStor Preprints 216802, ZBW - Leibniz Information Centre for Economics.
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