Are Firms from European Union Financially-Stressed Countries More Credit Constrained?

Using a large microdata database from the European Commission and European Central Bank survey (Survey on Access to Finance of Enterprises), we investigate in this paper what factors are playing a significant role in explaining why companies from European Union are credit constrained, and if the firms from financially stressed countries are more credit constrained. We found that smaller companies are more likely to be more credit constrained than larger companies in all our estimated models. The impact of the age of the firm on credit access is found to be mixed. A positive performance in terms of profitability seems to come hand in hand with a lower likelihood of being credit constraints. A deterioration of the outlook of the firm in terms of sales and profitability or business plan there will trigger a higher likelihood of being credit constrained, the impact being stronger for stressed economies. Not in the last, the access to public financial support, including guarantees, has a “grease” effect on access to bank loans, reducing the probability of being credit constrained, the positive impact being stronger in stressed countries.