Firm Access to Finance in the European Crisis

This paper assesses the effect of the recent economic and sovereign debt crisis on credit demand and supply and the terms and conditions of bank financing for small and medium enterprises (SMEs) across euro area countries. We combine firm micro data with real and financial macroeconomic variables to examine which factors are important for supply and which for demand. We find that real economic variables such as changes in gross domestic product (GDP) are important drivers of credit demand, while financial variables such as sovereign yields have a significant effect on the supply of credit and the terms and conditions on bank loans. E-mail: [email protected] E-mail: [email protected] E-mail: [email protected]. The views expressed in this paper are our own, and do not necessarily reflect the views of the Central Bank of Ireland or the ESCB.