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Do SMEs in deprived areas find it harder to access finance?: evidence from the UK small business survey

Lee, Neil and Drever, Emma (2014) Do SMEs in deprived areas find it harder to access finance?: evidence from the UK small business survey. Entrepreneurship and Regional Development, 26 (3-4). pp. 337-356. ISSN 0898-5626

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Identification Number: 10.1080/08985626.2014.911966

Abstract

Encouraging enterprise in deprived places is an important objective of the UK government policy. Evidence on the perceptions of entrepreneurs suggests that access to finance may be harder for firms in deprived areas, who may have fewer contacts, less collateral or worse access to mainstream banks. Yet there is little empirical evidence on whether this is actually the case. This paper investigates whether firms in deprived areas are more likely to find it hard to access finance than other firms, using a sample of around 3500 UK small and medium sized enterprises (SMEs). We find that firms in deprived areas are more likely to perceive access to finance is a problem. However, controlling for SME characteristics, firm growth, credit scores and selection effects, we find no evidence that they actually do find it harder to obtain. The results suggest that geographical disparities in access to finance are unimportant for the average firm.

Item Type: Article
Official URL: http://www.tandfonline.com/loi/tepn20
Additional Information: © 2014 Taylor & Francis
Divisions: Geography & Environment
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
Sets: Departments > Geography and Environment
Date Deposited: 13 May 2014 07:58
Last Modified: 30 Jan 2019 19:33
URI: http://eprints.lse.ac.uk/id/eprint/56735

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