Who needs credit and who gets credit in Eastern Europe?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractBased on survey data covering 8,387 firms in 20 countries we compare credit demand and credit supply for firms in Eastern Europe to those for firms in selected Western European countries. We find that firms in Eastern Europe have a higher need for credit than firms in Western Europe, and that a higher share of firms is discouraged from applying for a loan. The higher rate of discouraged firms in Eastern Europe is driven more by the presence of foreign banks than by the macroeconomic environment or the lack of creditor protection. We find no evidence that foreign bank presence leads to stricter loan approval decisions. Finally, credit constraints do have a real cost in that firms which are denied credit or discouraged from applying are less likely to invest in R&D and introduce new products.

Subsidies, financial constraints and firm innovative activities in emerging economies

“…9 Starting with 2008, the survey underwent changes in the questionnaire and methodology which aimed to improve cross-country comparability and to make it compatible with the Enterprise Surveys the World Bank has been implementing in other regions of the world since 2006. Earlier rounds of BEEPS have been used by Brown et al (2011), Gorodnichenko and Schnitzer (2013), Popov (2013), Hanedar et al (2014), while Ayyagari et al (2011) Gorodnichenko and Schnitzer (2013) analyse similarly defined variables using earlier rounds of BEEPS. In their UK SMEs analysis, Lee et al (2015) also define innovators as those firms which have introduced a new product in the previous 12 months.…”

“…Furthermore, emphasis is put on the interaction between public subsidies and firm financial constraints. As capital markets in emerging countries are less mature, firms' investment in innovative activities is likely to be more severely affected by financial constraints relative to the innovative investment of firms in developed economies (Erol 2005;Brown et al 2011). Although mainly in the form of imitation (i.e., new-to-firm innovation), innovation is as important for the economic growth of these countries as new-to-world innovations.…”

Microfinance beyond self-employment: Evidence for firms in Bulgaria

“…The even spread of branches across differently developed economic regions additionally points into the same direction. Moreover, as M. Brown et al (2011) show that only 5 percent of firms which applied for a loan in Eastern Europe in 2004 were rejected, program selection does not seem too acute in our context. Nonetheless, as descriptive statistics showed, characteristics of participants are different from those of non-participants already before participating in the program and some of the change in employees might rather be attributable to these differences rather than the microcredit program.…”

R&D, Credit Constraints, and Demand Fluctuations

“…Meriküll et al (2012) find that some part of the lower R&D expenditures of CSEE countries is explained by their industry structure, which relies to a greater extent on low-tech industries. Brown et al (2011) find that there are more discouraged firms in Eastern than in Western European credit markets, and that credit-constrained firms in Eastern Europe are less likely to invest in R&D. This paper contributes to this literature by investigating whether the business cycle also has played a role in explaining low R&D activity in CSEE countries.…”