Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/190265 
Year of Publication: 
2018
Series/Report no.: 
ADBI Working Paper No. 844
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
By employing a sample of 20,956 observations of non-financial SMEs headquartered in the Euro area, between 2009 and 2015, we test whether young businesses are more likely to face credit rejections from lenders than their older peers. Our 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 we handle 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.
Subjects: 
SMEs
young enterprises
bank loans
credit rationing
JEL: 
G20
G21
G30
L26
M13
D82
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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