Research Repository

What affects bank debt rejections? Bank lending conditions for UK SMEs

Sun, Mingchen and Girardone, Claudia and Calabrese, Raffaella (2021) 'What affects bank debt rejections? Bank lending conditions for UK SMEs.' The European Journal of Finance, 27 (6). pp. 537-563. ISSN 1351-847X

Manuscript R2 May20.pdf - Accepted Version

Download (243kB) | Preview
Tables and figures R2 May20.pdf - Supplemental Material

Download (225kB) | Preview


Using the UK SMEs Finance Monitor data over 2011-2017, we explore the determinants of bank debt rejections for UK SMEs. In the wake of the global financial crisis, business overdrafts and term loans show slightly different trends although the factors affecting rejections are similar. We find that since 2014 rejection rates reduced for both facilities and they remained stable in the run-up to the Brexit referendum and its immediate aftermath, although export and import SMEs operating in industries with a high share of EU trade experienced tighter conditions. Further, we present robust evidence that firms with female owners, organised in partnerships, and with a higher initial credit balance are more likely to have their credit application approved. Finally, younger, smaller and more innovative SMEs are more likely to be rejected, while their chance of being successful in their credit applications increases substantially after 2014.

Item Type: Article
Uncontrolled Keywords: Small and Medium-Sized Enterprises; Access to Finance; Overdrafts; Term Loans
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Essex Business School
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 20 Jul 2020 08:42
Last Modified: 18 Aug 2022 12:33

Actions (login required)

View Item View Item