State dependence in access to credit

How firms finance innovation. Further empirics from European SMEs

“…Fourth, estimations also document the importance of family and friends as informal channels to finance innovation. This result might be motivated by the fact that the sample mainly consists of micro and small firms, which often face difficulties in accessing formal external financing due to the lack of transparency regarding their credit records and ability to provide collateral (Cowan et al., 2015; Pigini et al., 2016). Our evidence shows that informal financing and borrowing from family and friends have some “information advantage” related to some altruistic ties (Allen, Qian, & Xie, 2019), which in the presence of asymmetric information can overcome financial frictions in credit markets for SMEs.…”

“…The uncertainty related to innovation efforts and the presence of asymmetric information characterizing capital markets render financing innovation difficult for small and medium‐sized enterprises (SMEs) (Acharya & Xu, 2017). It is well known that financial constraints faced by SMEs have several dimensions and appear to be driven by both market distortions in credit allocation (Nickell & Nicolitsas, 1999; Stiglitz & Weiss, 1981) and firm‐level factors, such as the lack of transparency of their credit records and the ability to provide collateral (Cowan, Drexler, & Yañez, 2015; Pigini, Presbitero, & Zazzaro, 2016). Credit obstacles are even more binding during times of economic crisis, leading to suboptimal financing activities of SMEs (Agénor & da Silva, 2017; Carbo‐Valverde, Degryse, & Rodríguez‐Fernández, 2015; Popov & Udell, 2012; Popov & Van Horen, 2014).…”

Is there a gender effect on the cost of bank financing?

“…In addition, it is worth noting that SMEs have a harder time than larger firms in obtaining credit (Beck et al, 2010). This is mainly due to their intrinsic lack of ability to produce high quality collateral and a lack of transparency related to their creditworthiness (Cowan et al, 2015;Fredriksson and Moro, 2014;Öztürk and Mrkaic, 2014;Pigini et al, 2016;Vos et al, 2007). In particular, the availability of information is important to banks, as it eases the selection of the borrowers by reducing moral hazard and adverse selection risks (Berger and Udell, 1995;Berger and Udell, 2002;Diamond, 1984).…”

Do SMEs Benefit from Unconventional Monetary Policy and How? Microevidence from the Eurozone

“…The identification approach that we use in this paper is to measure supply effects directly from a firm‐level survey data set that is specifically designed for this purpose. This approach has been particularly helpful in identifying the effects of the twin crises in Europe (e.g., Popov and Udell , Presbitero, Udell, and Zazzaro , Pigini, Presbitero, and Zazzaro , Ferrando, Popov, and Udell , Beck et al. ).…”