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SME financing in the EU: Moving beyond one-size-fits-all

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  • Demary, Markus
  • Hornik, Joanna
  • Watfe, Gibran

Abstract

The proposal for a European Capital Markets Union (CMU) carries large potential economic benefits from enhancing the financing possibilities for Small and Medium-Sized Enterprises (SMEs). By deepening the capital markets and strengthening cross-border integration, the European Commission hopes to stimulate economic growth and boost employment. In this paper, we discuss to what extent these goals can be achieved, in light of the complex business environment of European SMEs. We outline the different types of SMEs in terms of their financing structures as well as the pervasive differences across the EU, concluding that any policy approach must take into account the diversity of the companies' financing needs and the market realities in the Member States. We argue that the CMU is likely to have a heterogeneous impact, with some types of SMEs and certain regions gaining more than others.

Suggested Citation

  • Demary, Markus & Hornik, Joanna & Watfe, Gibran, 2016. "SME financing in the EU: Moving beyond one-size-fits-all," IW-Reports 11/2016, Institut der deutschen Wirtschaft (IW) / German Economic Institute.
    • Handle: RePEc:zbw:iwkrep:112016
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    Cited by:

    1. Febi Jensen & Dorothea Schäfer & Andreas Stephan, 2019. "Financial Constraints of Firms with Environmental Innovation," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 88(3), pages 43-65.
    2. Kraemer-Eis, Helmut & Lang, Frank & Torfs, Wouter & Gvetadze, Salome, 2017. "European Small Business Finance Outlook: June 2017," EIF Working Paper Series 2017/43, European Investment Fund (EIF).
    3. Sascha Sardadvar, 2018. "Is a Company’s Access to Private Equity and Venture Capital Affected by Location or Management Diversity? Some Empirical Evidence from Austria," International Journal of Business and Management, Canadian Center of Science and Education, vol. 13(7), pages 1-45, June.

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    More about this item

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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