Financial resilience of British SMEs during the financial crisis of 2008

Abstract

Access to finance is considered one of the top constraints on SMEs’ growth and survival. During bank crises, although facing a credit crunch, a few SMEs still survive, hence I study what makes survivor SMEs’ financial resilience. This is not clearly defined in previous studies. The study contributes to these with empirical evidence of SMEs in the UK from pre- to post-crisis of the bank crisis of 2008. The study finds that the financial resilience of the SMEs is affected positively by a supplier network, profitability, internal equity, and diversity of financing, but negatively by bank loan dependence. During the crisis, the key driving factor for SMEs’ financial resilience is profitability. It remains a challenge for policymakers to offer a stable financing strategy to assist SMEs