This paper explores the determinants of access to finance for small and medium enterprises (SMEs) in the context of three Central European countries: Czech Republic, Slovak Republic, and Hungary. The data set of the research is obtained from the BEEPS survey, which is conducted by the World Bank and the European Bank for Reconstruction and Development. This paper empirically analyses firms not only from the SMEs point of view, but also shows results for micro, small and medium enterprises separately. Additionally, we have analysed the determinants of access to finance for SMEs at each country level for an in-depth understanding of country-level variations in SME financing. The results indicate that micro firms and firms owned and operated by women are experiencing a shortage of credits from banks. On the other hand, we found a positive relationship between the pledge of collateral and access to finance. With respect to the medium firms, we found evidence that innovative firms have a larger amount of credit from banks. The empirical results also suggest that the loan size increases as the interest rates increase in particular for SMEs on the whole and for micro-firms, although the interest rate is in a negative relationship with the loan size in Czech Republic.
ALESINA, A.F., LOTTI, F., MISTRULLI, P.E. (2013). Do women pay more for credit: evidence from Italy? Journal of European Economic Association, 11, 46-66.
AYYAGARI, M., BECK, T., DEMIRGÜÇ-KUNT, A. (2007). Small and medium enterprises across the globe. Small Business Economics, 29, 415–434. http://doi.org/10.1007/s11187-006-9002-
BAREGHEH, A., ROWLEY, J., SAMBROOK, S. (2009). Towards a multidisciplinary definition of innovation. Management Decision, 47(8), 1323-1339.
BECK, T., DEMIRGÜÇ-KUNT, A. (2006). Small and medium-size enterprises: access to finance as a growth constraint. Journal of Banking and Finance, 30, 2931-2943. http://doi.org/10.1016/j.jbankfin.2006.05.009
BECK, T., DEMIRGUC-KUNT, A., MARTINEZ PEIRA, M.S. (2011). Bank financing for SMEs: evidence across countries and bank ownership types. Journal of Financial Services Research, 39, 35-54.
BELÁS, J., SOPKOVÁ G. (2016). Significant determinants of the competitive environment for SMEs in the context of financial and credit risks. Journal of International Studies, 9(2), 139-149. doi: 10.14254/2071-8330.2016/9-2/10
BELLUCHI A., BORISOV, A., ZAZZARO, A. (2010). Does gender matter in bank-firm relationships? Evidence from small business lending. Journal of Banking and Finance, 34, 2968-2984.
BERGER, A., ESPINOSA-VEGA, M.A., FRAME, W.S., MILLER, N.H. (2011). Why do borrowers pledge collateral? New evidence on the role of asymmetric information. Journal of Financial Intermediation, 20, 55-70. http://doi.org/10.5089/9781451862201.001
BERGER, A.N., UDELL, G.F. (2002). Small business credit availability and relationship lending: the importance of bank organisational structure. The Economic Journal, 112(477), 32-53. https://doi.org/10.1111/1468-0297.00682
BESANKO, D., THAKOR, A. (1987). Collateral and rationing: sorting equilibria in monopolistic and competitive credit markets. International Economic Review, 28, 671-689. http://doi.org/10.2307/2526573
BESTER, H. (1987). The role of collateral in credit markets with imperfect information. European Economic Review, 31, 887-899. https://doi.org/10.1016/0014-292(87)90005-5
BLAZY, R., WEILL, L. (2013). Why do banks ask for collateral in SME lending? Applied Financial Economics, 23(13), 1109-1122.
BOLTON, P., FREIXAS, X., GAMBACORTA, L., MISTRULLI, P.E. (2013). Relationship and Transaction Lending in a Crisis. Bank of Italy, Temi di Discussione, No. 917.
BONINI, S., DELL’ACQUA, A., FUNGO, M., KYSUCKY, V. (2015), “Credit market concentration, relationship lending and the cost of debt”, International Review of Financial Analysis, Vol. 45, pp. 172-179. http://doi.org/10.1016/j.irfa.2016.03.013
BRANCATI, E. (2015). Innovation financing and the role of relationship lending for SMEs. Small Business Economics, 44, 449-473. http://doi.org/10.1007/s11187-014-9603-3
BRICK, I.E., PALIA, D. (2007). Evidence of jointness in the terms of relationship lending. Journal of Financial Intermediation, 16, 452-476. http://doi.org/10.1016/j.jfi.2007.01.001
CARTER, S., ROSA, P. (1998). The Financing of Male and Women-owned Businesses. Entrepreneurship and Regional Development, 10, 225–241. https://doi.org/10.1016/0014-292(87)90005-5
CARTER, D.A., MCNULTY, J.E., VERBRUGGE, J.A. (2004). Do small banks have an advantage in lending? An examination of risk-adjusted yields on business loans at large and small banks. Journal of Financial Services Research, 25, 233-252.
CENNI, S., MONFERRA, S., SALOTTI, V., SANGIORGI, M., TORLUCCIO, G. (2015). Credit rationing and relationship lending. Does firm size matter. Journal of Banking and Finance, 53, 249-265. http://doi.org/10.1016/j.jbankfin.2014.12.010
CHAIBI, H., FTITI, Z. (2015). Credit risk determinants: evidence from a cross-country study. Research in International Business and Finance, 33, 1-16.
CHAKRABORTY, A., HU, C.X. (2006). Lending relationships in line-of-credit and nonline-of-credit loans: Evidence from collateral use in small business. Journal of Financial Intermediation, 15, 86-107. http://doi.org/10.1016/j.jfi.2005.07.002
CHAN, Y. S., KANATAS, G. (1985). Asymmetric valuations and the role of collateral in loan agreements. The Journal of Money Credit and Banking, 17, 84-95. http://doi.org/10.2307/1992508
COLE, R.A. (1998). The importance of relationships to the availability of credit. Journal of Banking and Finance, 22, 959-977. http://doi.org/10.1016/S0378-4266(98)00007-7
COMEIG, I., FERNANDAZE-BLANCO, M.O., RAMIREZ, F. (2015). Information acquisition in SME’s relationship lending and cost of loans. Journal of Business Research, 68, 1650-1652. http://doi.org/10.1016/j.jbusres.2015.02.012
DIERKES, M., ERNER, C., LANGER, T., NORDEN, L. (2013). Business credit information sharing and default risk of private firms. Journal of Banking and Finance, 37, 2867-2878. http://doi.org/10.1016/j.jbankfin.2013.03.018
FARINHA, L., FELIX, S. (2015). Credit rationing for Portuguese SMEs. Finance Research Letters, 14, 167-177. http://doi.org/10.1016/j.frl.2015.05.001
FERRI, G., MURRO, P. (2015). Do firm odd couples exacerbate credit rationing. Journal of Financial Intermediation, 24, 231-251. http://doi.org/10.1016/j.jfi.2014.09.002
FREEL, M. (2007). Are small innovators credit rationed”, Small Business Economics, 28, 23-35. http://doi.org/10.1007/s11187-005-6058-6
GARWE, D. K., FATOKI, O. (2012). The impact of gender on SME characteristics and access to debt finance in South Africa. Development Southern Africa, 29(3), 448-461. http://doi.org/10.1080/0376835X.2012.706040
GODLEWSKI, C.J., WEILL, L. (2011). Does collateral help mitigate adverse selection? A cross-country analysis. Journal of Financial Services Research, 40, 49-78. https://doi.org/10.1007/s10693-010-0099-y
GOMPERS, P. (1995). Optimal investment, monitoring, and the staging of venture capital. Journal of Finance, 50, 1461-1489. https://doi.org/10.2307/2329323
HAINZ, C., WEILL, L., GODLEWSKI, C.J. (2013). Bank competition and collateral: Theory and evidence. Journal of Financial Services Research, 44, 131-148.
HALL, B. H. (2002). The financing of research and development. Oxford Review of Economic Policy, 18, 35-51. http://doi.org/10.1093/oxrep/18.1.35
HANEDAR, E.Y., BROCCARDO, E., BAZZANA, F. (2014). Collateral requirements of SMEs: the evidence from less developed countries. Journal of Banking and Finance, 38, 106-121. https://doi.org/10.1016/j.jbankfin.2013.09.019
HERNANDAZ-CANOVAS, G., MARTINEZ-SOLANO, P. (2010). Relationship lending and SME financing in the continental European bank-based system. Small Business Economics, 34, 465-482.
IRWIN, D., SCOTT, J.M. (2010). Barriers faced by SMEs in raising bank finance”, International Journal of Entrepreneurial Behaviour and Research, 16(9), 245-259. http://doi.org/10.1108/13552551011042816
KNYAZEVA, A., KNYAZEVA, D. (2012). Does being your bank’s neighbor matter? Journal of Banking and Finance, 36, 1194-1209. http://doi.org/10.1016/j.jbankfin.2011.11.011
KIRSCHEMANN, L. (2016). Credit rationing in small firm bank relationships. Journal of financial Intermediation, 26, 68-99. http://doi.org/10.1016/j.jfi.2015.11.001
LEE, N., SAMEEN, H., COWLING, M. (2015). Access to finance for innovative SMEs since the financial crisis. Research Policy, 44, 370-380. http://doi.org/10.1016/j.respol.2014.09.008
LEON, F. (2015). Does bank competition alleviate credit constraints in developing countries? Journal of Banking and Finance, 57, 130-142. http://doi.org/10.1016/j.jbankfin.2015.04.005
MENKHOFF, L., NEUBERGER, D., RUNGRUXSIRIVORN, O. (2012). Collateral and its substitutes in emerging markets lending. Journal of Banking and Finance, 36, 817-834. http://doi.org/10.1016/j.jbankfin.2011.09.010
MIAN, A. (2003). Foreign, private domestic, and government banks: New evidence from emerging markets. University of Chicago, Mimeo.
MOHNEN, P., ROLLER, L.H. (2005). Complementarities in innovation policy. European Economic Review, 49, 1431-1450. http://doi.org/10.1016/j.euroecorev.2003.12.003
MURAVYEV, A., TALAVERA, O., SCHÄFER, D. (2009). Entrepreneurs’ gender and financial constraints: Evidence from international data, Journal of Comparative Economics, 37, 270–286. http://doi.org/10.1016/j.jce.2008.12.001
MYERS, S.C., MAJLUF, N. (1984). Corporate financing and investment decisions when firms have information investors do not have”, Journal of Financial Economics. 13, 187-221. http://doi.org/10.1016/0304-405X(84)90023-0
NEUBERGER, D., RATHKE-DOPPNER, S. (2015). The role of demographics in small business loan pricing. Small Business Economics, 44, 411-424. http://doi.org/10.1007/s11187-014-9602-4
NEUBERGER, D., RATHKE, S. AND SCHACHT, C., (2006). The number of bank relationship of SMEs: a disaggregated analysis of changes in the Swiss loan market. Economic Notes, 35(3), 319-353. http://doi.org/10.1111/j.1468-0300.2006.00168.x
ORTIZ-MOLINA, H., PENAS, M.F. (2008). Lending to small businesses: the role of loan maturity in addressing information problems. Small Business Economics, 30, 361-383. http://doi.org/10.1007/s11187-007-9053-2
PEDERZOLI, C., THOMA, G. AND TORRICELLI, C. (2013). Modelling credit risk for innovative SMEs: the role of innovative measure. Journal of Financial Services Research, 44, 111-129. http://doi.org/10.1007/s10693-012-0152-0
PETERSEN, M.A., RAJAN, R.G. (2002). Does distance still matter? The information revolution in small business lending. The Journal of Finance, 57, 2533-2570. 2533-2570. https://doi.org/10.1111/1540-6261.00505
PETERSEN, M.A., RAJAN, R.G., (1995). The effect of competition on lending relationship. The Quarterly Journal of Economics, 110(2), 407-443. https://doi.org/10.2307/2118445
RAHMAN, M.T., KHAN, H.T.A. (2013). The effectiveness of micro-credit program in Bangladesh. Local Economy, 28(1), 85-98.
RAHMAN, A., RAHMAN, M.T., KLJUCNIKOV, A. (2016a). Collateral and SME financing: an analysis across bank size and bank ownership types. Journal of International Studies, 9(2), pp. 112-126.
RAHMAN, A., RAHMAN, M.T., KLJUCNIKOV, A. (2016b). Bank size, relationship lending and SME financing: Evidence from Bangladesh. Actual Problems of Economics, 183, 294-307.
SHUMWAY, T. (2001). Forecasting bankruptcy more accurately: a simple hazard model. The Journal of Business, 74(1), 101-124. http://doi.org/10.1086/209665
STEFANI, M.L., VACCA, V. (2015). Small firms credit access in the Euro area: Does gender matter. CESifo Economic Studies, 61(1), 165-201. http://doi.org/10.1093/cesifo/ifu031
STEIJVERS, T., VOORDECKERS, W., VANHOOF, K. (2010). Collateral, relationship lending and family firms. Small Business Economics, 34, 243-259. http://doi.org/10.1007/s11187-008-9124-z
STIGLITZ, J.E., WEISS, A. (1981). Credit rationing in markets with imperfect information. The American Economic Review, 71, 393-410.
UCHIDA, H., UDELL, G.F., YAMORI, N. (2012). Loan officers and relationship lending to SMEs. Journal of Financial Intermediation, 21, 97-122. http://doi.org/10.1016/j.jfi.2011.06.002
WATSON, J., BEWBY, R., MAHUKA, A. (2009). Gender and the SME finance gap. International Journal of Gender and Entrepreneurship, 1(1), 42-56. http://doi.org/10.1108/17566260910942336