Banking Crisis and SME Credit Risk Assessment
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Small and medium-sized enterprises (SMEs) are a major concern for European policy-makers. The fixed costs entailed in accessing financial markets may be too high for SMEs, on the one hand; on the other, the increase in bank capital requirement has produced a credit crunch. When banks become more risk adverse (such as after the financial crisis) and/or the regulatory costs involved in an SME maintaining its loan status in the bank book are too high for it to support (such as after the most recent changes in banking capital rules), firms faced with credit constraint are more likely to exit the market. In this context, part of the solution for the funding gap SMEs face may be dependent on shadow banking and alternative funding options.
KeywordsCredit Risk Capital Requirement Bank Capital Shadow Banking Credit Risk Assessment
References on CCRs
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