Trade Credit, Bank Credit, and Flight to Quality: Evidence from French SMEs

Psillaki, Maria; Eleftheriou, Konstantinos

doi:10.1111/jsbm.12106

Cited by 103 publications

(96 citation statements)

References 100 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In the South, SMEs more often tend to be in the trade-financed SME cluster (17.5%). This result can be explained by the generally longer payment periods in these countries (EPI 2014;Garcia-Teruel and Martinez-Solano 2010;Marotta 2005;Psillaki and Eleftheriou 2014). The finding that 22.6% of SMEs in Northern Europe are trade-financed SMEs is in line with the results of Demirgüç-Kunt and Maksimovic (2001).…”

Section: Country-specific Characteristicssupporting

confidence: 80%

“…However, most studies in the past only differentiated between external equity and external debt, and did not take into account that a variety of external financing instruments exist, which can complement and/or substitute traditional debt or equity instruments (Beck et al 2008;Berger and Udell 1998;Casey and O'Toole 2014;Cosh et al 2009). Furthermore, it has been found that these effects change over the business cycle and in particular in times of financial crises (Casey and O'Toole 2014;Psillaki and Eleftheriou 2014). Table 1provides an overview of relevant empirical studies.…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Financing patterns of European SMEs – an empirical taxonomy

2016

View full text Add to dashboard Cite

PrefaceSmall and medium-sized enterprises (SMEs) are often called the backbone of the European economy, contributing to job creation and economic growth. In 2013, more than 21.5m of SMEs in the European Union made for more than 99% of all non-financial enterprises, employed almost 89m people (67% of total employment), and generated 58% of total added value. However, access to finance is more difficult for SMEs than for larger enterprises, not only during the current financial and economic crisis, but also on a permanent structural basis, due to market imperfections in SME financing (see Kraemer-Eis, Lang and Gvetadze, 2015, for more details).The European Investment Fund (EIF) supports Europe's SMEs by improving their access to finance through a wide range of selected financial intermediaries. To this end, the EIF primarily designs, promotes and implements equity and debt financial instruments which specifically target SMEs. In this role, the EIF fosters EU objectives in support of entrepreneurship, growth, innovation, research and development, and employment.EIF's Research & Market Analysis team has established a research cooperation with the Chair of Management at the University of Trier. This EIF Working Paper is one result of the successful cooperation. A follow-on project, building on the findings of the presented analysis and financially supported by the EIB Institute under the Knowledge Programme, is scheduled to start soon.Even though research in SME financing has strongly increased over the recent years, the financing patterns of SMEs in Europe are still not well analysed. Previous empirical studies have shown that firm-, product-, industry-, and country-specific factors influence the financing of SMEs. However, there are only few studies with a holistic perspective taking into account the interrelationships between different financing instruments and their determinants.The research, presented in this EIF Working Paper, provides an integrative perspective of SME financing patterns by identifying and analysing in detail the use of various financing instruments by SMEs. The findings can support the design and development of SME financing instruments across Europe.We thank the researchers for their important work and the very good cooperation with the EIF. We also thank the participants of a seminar with the researchers, which took place at EIF, as well as the participants of a workshop that took place at the European Central Bank, for fruitful discussions. This EIF Working Paper takes a holistic approach to investigate SME financing patterns in Europe by performing a cluster analysis including 12,726 SMEs in 28 European countries. The results reveal that SME financing in Europe is not homogenous but that different financing patterns exist. The cluster analysis identifies six distinct SME financing types: mixed-financed SMEs, statesubsidised SMEs, debt-financed SMEs, flexible-debt-financed SMEs, trade-financed SMEs and internally-financed SMEs. These SME financing types differ according to the number of fin...

show abstract

Section: Country-specific Characteristicssupporting

confidence: 80%

Section: Introductionmentioning

confidence: 99%

Financing patterns of European SMEs – an empirical taxonomy

2016

View full text Add to dashboard Cite

show abstract

“…This is attributed to the fact that, the larger the firm's size, the better the APP performance [28] . A study conducted by [21], shows that small companies heavily depend on trade credit leading to an increase in APP.…”

Section: Accounts Payable Periodmentioning

confidence: 99%

Trends in working capital management and its impact on firms’ performance – An analysis of SMEs

Xiao-ting¹,

Chen²,

Yu³

2017

Research on Modern Higher Education

View full text Add to dashboard Cite

This paper aims to explore the relationship between the performance of small and medium enterprises (SMEs) and working capital management. To make the research robust, accounting performance and measures of market related performance have been used to gauge the SMEs performance. This research utilizes secondary data obtained from the Alternative Investment Market concerning SMEs listed in the London Stock Exchange, to investigate the significance of working capital management towards the performance of SMEs. The working capital management components that were used in research are; account payable period APP, average collection period (ACP), return on assets (ROA) and inventory holding period (IHP). The analysis of data involved the use of regression analysis and extensive use of correlation analysis in order to establish the relationship between working capital management and SME performance. The study established that the use of WCM components such as cash conversion cycle, return on assets, cash conversion cycle and inventory holding period have a significant impact on the performance of SMEs. Further, it was established that when SMEs invested heavily in inventories and receivables, they amassed low profits while investment in current assets in relation to total assets lead to elevated profitability. Hence, it was concluded that there is a compelling relationship between WCM and SME performance.

show abstract

“…The flight-to-quality phenomenon has been attracting considerable scientific interest (Jones 2012;Briere, Chapelle, and Szafarz 2012;Rösch and Kaserer 2013;Pagano and Strother 2013;Psillaki and Eleftheriou 2014;Chabot 2014;Guerrieri and Shimer 2014). In spite of the continuous reappearance of flight-to-quality events along the economic history, the first mention related to these phenomena was made only less than two decades ago by Bernanke, Gertler, and Gilchrist (1996).…”

Section: Introductionmentioning

confidence: 99%

Typology for flight-to-quality episodes and downside risk measurement

Gubareva

Borges

2015

Applied Economics

View full text Add to dashboard Cite

We propose a total return-based framework to measure downside risk associated with phenomenon of capital outflows from riskier to safer financial markets. The proposed method consists of three elements: (i) the general definition of the flight-to-quality (FtQ) phenomenon, (ii) the typological classification of the flight-to-quality occurrences for associating them with the phases of the business cycle and (iii) the automated technique to diagnose the time frames and to measure the impact of flight-to-quality on financial instruments. The proposed framework is applied to analyse the global-scale capital inflows/outflows from emerging markets public debt to the US Treasuries and vice versa. The results show that different phases of business cycles and GDP growth rates, including turning points, could be associated with flights-to-quality of different types and causality origins. Addressing downside risk crystallizations in flight-to-quality occurrences, new perspectives of integrated interest rate risk and credit risk management are discussed. For strengthening financial stability, we suggest the use of flight-to-quality windows as scenarios for stress testing, both for banks and financial institutions.

show abstract

Trade Credit, Bank Credit, and Flight to Quality: Evidence from French SMEs

Abstract: This paper investigates the impact of the global financial crisis on the allocation of credit to small and medium-sized enterprises (SMEs

Cited by 103 publications

References 100 publications

Financing patterns of European SMEs – an empirical taxonomy

Financing patterns of European SMEs – an empirical taxonomy

Trends in working capital management and its impact on firms’ performance – An analysis of SMEs

Typology for flight-to-quality episodes and downside risk measurement

Contact Info

Product

Resources

About