Abstract
In this paper, we analyze the main characteristics of European Small and Medium Enterprises (SMEs), related to the demand for and access to external financial resources. We use microdata from an extensive database, elaborated by the European Central Bank and the European Commission: the Survey on the Access to Finance of Enterprises. Firstly, we consider a set of variables as determinants to the decision to apply for different financial instruments. Secondly, we use the same set of variables to analyze the actual access to these instruments. For each regression, several SMEs profiles were created, in order to detect SMEs archetypes according to their decisions. The results are thought-provoking, and highlight that differences in firms characteristics (size, innovative activities, etc.), influence not only the access to, but also the demand for external finance.
Highlights
Small and Medium Enterprises (SMEs) are commonly known as the backbone of the real economy
SMEs are the engine of the economy
The smallest firms have lower probabilities in applying for and accessing all of the financial instruments considered in this work
Summary
Small and Medium Enterprises (SMEs) are commonly known as the backbone of the real economy They represent 99.8% of all European business, which generate around 58% of the gross value added of the corporate sector in Europe. They are responsible for almost 67% of private sector employment, which represents 86.8 million people (Kaya 2014) This concern highlights the importance of SMEs growth and their needs for external financing and the problems they have to face to solve market barriers. In this sense, SMEs financial structure and its determinant is a wide subject of study that has changed over time and according to the set of SMEs analyzed, many factors affect their financial decisions. Kaya (2014) supports that SMEs in the countries that are the hardest hit by the recession and unemployment problems are those less favorable to get loans given the high level of lending rates
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