Global Capital Conditions and SME Performance

Abstract

This paper studies how a tightening in global capital conditions, led by the United States Federal Reserve (Fed)'s taper tantrum policy in 2013, affects small and medium-sized enterprises (SMEs) performance in Türkiye, specifically focusing on credit access, investment, and sales growth. Our findings reveal that the global tightening led to adverse effects on domestic credit conditions, resulting in SMEs experiencing their lowest credit access in 2013. As a result, SMEs' investment and sales growth experienced a significant decline with a one-year delay in 2014. However, the estimated negative effects on SME performance gradually diminished over the subsequent three years.