Access to Finance for SMEs and Entrepreneurs: Trends and Policies in OECD Countries

Abstract

In many OECD countries, the 2008–2009 global financial crisis exacerbated the financial constraints typically experienced by small- and medium-sized enterprises (SMEs) and entrepreneurs. Business loans and SME loans declined markedly during the recession, and, in some countries, half a decade after the crisis, the amount of SME financing had not yet returned to the precrisis level. The challenging mac-roeconomic environment, characterized by subdued growth and demand, severely affected profits for SMEs and reduced availability of internal funding. At the same time, the financial sector continued the deleveraging process started in the aftermath of the crisis, with banks endeavoring to meet Basel III capital and leverage ratio requirements through a combination of asset reduction and capital raising. In some countries, the sovereign debt crisis further increased the deficiencies in capital adequacy. This has squeezed credit availability for the entire banking system, but has impacted SMEs more than large firms.