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Credit constraints in European SMEs: does regional institutional quality matter?

Ganau, Roberto and Rodríguez-Pose, Andrés ORCID: 0000-0002-8041-0856 (2021) Credit constraints in European SMEs: does regional institutional quality matter? Applied Economics Letters. ISSN 1350-4851

[img] Text (Applied Economic Letters 2021 WP version) - Accepted Version
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Identification Number: 10.1080/13504851.2021.1934385

Abstract

We analyse the investment-to-cash flow relationship in Europe using a sample of manufacturing small- and medium-sized enterprises (SME) over the period 2009–2016. We investigate the effect of regional institutional quality on the investment-to-cash flow sensitivity, finding that, although credit constraints remain a serious problem for European SMEs, high-quality regional institutions contribute to mitigate the dependency on internally-generated resources to finance new investments. Improvements in local institutional quality can therefore facilitate SMEs’ access to credit–e.g. through inter-firm trade credit relationships –, but are insufficient to overcome the credit restrictions faced by European SMEs.

Item Type: Article
Official URL: https://www.tandfonline.com/toc/rael20/current
Additional Information: © 2021 Informa UK Limited, trading as Taylor & Francis Group
Divisions: Geography & Environment
Subjects: H Social Sciences > HG Finance
H Social Sciences > HD Industries. Land use. Labor
JEL classification: C - Mathematical and Quantitative Methods > C2 - Econometric Methods: Single Equation Models; Single Variables > C23 - Models with Panel Data
R - Urban, Rural, and Regional Economics > R5 - Regional Government Analysis > R50 - General
Date Deposited: 22 Oct 2021 17:33
Last Modified: 17 Nov 2021 01:05
URI: http://eprints.lse.ac.uk/id/eprint/112487

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