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Young Enterprises and Bank Credit Denials

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  • Danilo V. Mascia

Abstract

By employing a sample of 20,956 observations of non-financial SMEs headquartered in the Euro area, between 2009 and 2015, the paper tests whether young businesses are more likely to face credit rejections from lenders than their older peers. The findings appear to confirm our suspicions that new enterprises consistently experience higher denials from banks compared to more established businesses. Such a result is stable to different model specifications and is also confirmed once it handles the issue of sample selection bias potentially affecting our data. Additional tests also reveal that credit constraints are particularly difficult for young SMEs located in Southern and Central Europe, as well as for those operating in the “Trade†industry. Overall, our evidence suggests that actions from the policy maker could be desirable to support the viability of credit and, thus, ensure the growth of young businesses in the Euro area.

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  • Danilo V. Mascia, 2018. "Young Enterprises and Bank Credit Denials," Working Papers id:12814, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:12814
    Note: Institutional Papers
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    Cited by:

    1. Stefania Basiglio & Paola Vincentiis & Eleonora Isaia & Mariacristina Rossi, 2023. "Women-led Firms and Credit Access. A Gendered Story?," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 9(1), pages 199-233, March.
    2. Francesco Campanella & Luana Serino, 2019. "Gender and Financial Constraints: An Empirical Investigation in Italy," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 10(2), pages 109-120, April.

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