Access to Credit as a Growth Constraint

• Authors: Volk Matjaž , Trefalt Polona
• Languages of publication: EN

Abstracts

EN

From a sample of 75,854 Slovenian firms in the period 1995-2011, we examine the effects of a firm's access to bank credit on its growth. The results suggest that as the external financing constraint relaxes and firm gets access to credit, the reliance on internal funds to finance growth decreases. By exploring the role of available collateral in gaining access to bank credit, we find that collateral only helps larger firms to obtain credit more easily. On the other hand, collateral does not reduce micro firms' dependence on internal funds to finance growth, which suggests that even if they have collateral, banks are still unprepared to finance them, possibly due to the level of risk. It could also be that in approving credit to micro firms, other factors such as liquidity or cash flow are more highly considered by banks than the value of collateral.

Keywords

EN

Financial constraints; Access to credit; Firm growth; Collateral; Dynamic panel

• Publisher: Uniwersytet Warszawski. Wydawnictwo Naukowe Wydziału Zarządzania
• Journal: Journal of Banking and Financial Economics
• Year: 2014
• Issue: 1(1)
• Pages: 29-39

Dates

online

2014-05-19

Contributors

author

Volk Matjaž

• Bank of Slovenia

author

Trefalt Polona

• Bank of Slovenia

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Identifiers

ISSN

2353-6845

DOI

10.7172/2353-6845.jbfe.2014.1.2