Skip to main content
SpringerLink
Log in

The European Capital Markets Union and its Impact on Future SME Financing

  • Chapter
  • First Online:
Contemporary Developments in Entrepreneurial Finance

Part of the book series: FGF Studies in Small Business and Entrepreneurship ((FGFS))

Abstract

Small- and medium-sized enterprises (SMEs) are facing enormous changes in the European financial sector. A growing number of international businesses are being confronted with a shift in financing towards international sourcing opportunities. Thus, to make international capital markets more attractive to European SMEs, the European Commission is currently implementing 33 new measures (the European Capital Markets Union). The goal of these measures is to incentivise more capital market-based forms of financing. However, the question of whether these new measures will also lead to an effective improvement in new venture and growth financing has not been answered. Our article intends to fill this gap in the research literature by applying a mixed-method approach focussing on experts (interviews) and SME firms (survey). We find that the Capital Markets Union will by no means make regional banking systems superfluous with regard to future SME financing. We conclude that banks and capital markets can only contribute significantly to stabilising the European financial system by complementing each other.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 79.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 99.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 139.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    The German banking sector is organised into commercial banks, public-sector banks and cooperative banks.

  2. 2.

    At present, the UK is regarded as the most important place in Europe for many capital market segments. According to estimates, the depth of the EU capital market will be reduced by approximately 16% due to the exit. Noticeable cuts are expected for venture capital markets.

  3. 3.

    The main focus of the subject areas not presented here is firstly on the promotion of long-term infrastructure and sustainable investments, secondly on fostering retail investments and finally on the alleviation of cross-border investments.

  4. 4.

    STC means “simple”, “transparent” and “comparable”; STS means “standardised”, “transparent” and “simple”.

  5. 5.

    Only bank loans themselves are considered here—credit lines, bank overdrafts and credit card overdrafts are explicitly not included in the statistics quoted.

  6. 6.

    Company specification in line with the definition of the IfM Bonn.

References

  • Aghion, P., Howitt, P., & Mayer-Foulkes, D. (2005). The effect of financial development on convergence: Theory and evidence. The Quarterly Journal of Economics, 120(1), 173–222.

    Google Scholar 

  • Allard, J., & Blavy, R. (2011). Market phoenixes and banking ducks: Are recoveries faster in market-based financial systems? IMF working paper no. WP/11/213.

    Google Scholar 

  • Backes-Gellner, U., & Werner, A. (2007). Entrepreneurial signaling via education: A success factor in innovative start-ups. Small Business Economics, 29(1–2), 173–190.

    Article  Google Scholar 

  • Bank for International Settlements. (2017). Basel III: Finalising post-crisis reforms. BCBS 424, Basel.

    Google Scholar 

  • Beck, T., & Levine, R. (2002). Industry growth and capital allocation: Does having a market- or bank-based system matter. Journal of Financial Economics, 64(2), 147–180.

    Article  Google Scholar 

  • Beck, T., Kaserer, C., & Rapp, S. (2015). Beteiligungs- und Kapitalmarktfinanzierung im deutschen Finanzsystem: Zustand und Weiterentwicklungsperspektiven: Abschlussbericht.

    Google Scholar 

  • Ben Naceur, S., Marton, K., & Roulet, C. (2018). Basel III and bank-lending: Evidence from the United States and Europe. Journal of Financial Stability, 39, 1–27.

    Article  Google Scholar 

  • Bendel, D., Demary, M., & Voigtländer, M. (2016). Entwicklung der Unternehmensfinanzierung in Deutschland. IW-Trends – Vierteljahresschrift zur empirischen Wirtschaftsforschung, 43(1), 37–54.

    Google Scholar 

  • Berger, A. N., & Schaeck, K. (2011). Small and medium-sized enterprises, bank relationship strength, and the use of venture capital. Journal of Money, Credit and Banking, 43, 461–490.

    Article  Google Scholar 

  • Berger, A. N., & Udell, G. F. (1995). Relationship lending and lines of credit in small firm finance. The Journal of Business, 68(3), 351–381.

    Article  Google Scholar 

  • Berger, A. N., & Udell, G. F. (1998). The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle. Journal of Banking & Finance, 22(6–8), 613–673.

    Article  Google Scholar 

  • Block, J. H., Colombo, M. G., Cumming, D. J., & Vismara, S. (2017a). New players in entrepreneurial finance and why they are there. Small Business Economics, 50(2), 239–250.

    Article  Google Scholar 

  • Block, J. H., Fisch, C. O., & van Praag, M. (2017b). The Schumpeterian entrepreneur: A review of the empirical evidence on the antecedents, behaviour and consequences of innovative entrepreneurship. Industry and Innovation, 24(1), 61–95.

    Article  Google Scholar 

  • Boot, A. W. A. (2000). Relationship banking: What do we know? Journal of Financial Intermediation, 9(1), 7–25.

    Article  Google Scholar 

  • Börner, C., Grichnik, D., & Reize, F. (2010). Finanzierungsentscheidungen mittelständischer Unternehmer — Einflussfaktoren der Fremdfinanzierung deutscher KMU. Schmalenbachs Zeitschrift für betriebswirtschaftliche Forschung, 62(2), 227–275. https://doi.org/10.1007/BF03377359.

    Article  Google Scholar 

  • Bundesverband Crowdfunding. (2018). Position des Bundesverband Crowdfunding zu Änderungen im Vermögensanlagegesetz im Rahmen der derzeit geplanten Implementierung der EU-Prospektverordnung. Retrieved July 09, 2018, from https://www.bundesverband-crowdfunding.de/wp-content/uploads/2018/04/20180413_BVCF-Positionen_Wertpapier_VermAnl.pdf

    Google Scholar 

  • Carlin, W., & Mayer, C. (2003). Finance, investment, and growth. Journal of Financial Economics, 69(1), 191–226. https://www.sciencedirect.com/science/article/pii/S0304405X03001120/pdfft?md5=89bc7b01576c6b01d487afbb602d6d11&pid=1-s2.0-S0304405X03001120-main.pdf.

    Article  Google Scholar 

  • Croce, A., Guerini, M., & Ughetto, E. (2018). Angel financing and the performance of high-tech start-ups. Journal of Small Business Management, 56(2), 208–228.

    Article  Google Scholar 

  • de Bettignies, J.-E., & Brander, J. A. (2007). Financing entrepreneurship: Bank finance versus venture capital. Journal of Business Venturing, 22(6), 808–832.

    Article  Google Scholar 

  • Deipenbrock, G. (2017). Europäische Kapitalmarktunion und die Finanzierung von kleinen und mittleren Unternehmen – Ausgewählte Rechtsaspekte. ZfKE – Zeitschrift für KMU und Entrepreneurship, 65(1–2), 61–75.

    Article  Google Scholar 

  • Demary, M., Diermeier, M., & Haas, H. (2015). A capital markets union for Europe: The relevance of banks and markets. IW policy paper No. 18. http://www.econstor.eu/bitstream/10419/112775/1/82974794X.pdf

  • Demirgüç-Kunt, A., & Maksimovic, V. (2002). Funding growth in bank-based and market-based financial systems: Evidence from firm-level data. Journal of Financial Economics, 65(3), 337–363.

    Article  Google Scholar 

  • Döring, N., & Bortz, J. (2016). Forschungsmethoden und Evaluation in den Sozial- und Humanwissenschaften (5. vollständig überarbeitete, aktualisierte und erweiterte Auflage). Springer-Lehrbuch. Berlin: Springer.

    Google Scholar 

  • Elsas, R., & Krahnen, J. P. (1998). Is relationship lending special?: Evidence from credit-file data in Germany. Journal of Banking & Finance, 22(10–11), 1283–1316.

    Article  Google Scholar 

  • Elsinger, H., Köck, R., Kropp, M., & Waschiczek, W. (2016). Unternehmensfinanzierung in Österreich im Vorfeld der Kapitalmarktunion. Wirtschaftspolitische Blätter, 63(2), 447–463.

    Google Scholar 

  • Europäische Kommission. (2016). Vorschlag für eine Verordnung des Europäischen Parlaments und des Rates zur Änderung der Verordnung (EU) Nr. 575/2013 (2016/0360 (COD) No. COM(2016) 850 final).

    Google Scholar 

  • European Commission. (2015a). Green paper building a capital markets union (No. COM(2015) 63 final). Brussels.

    Google Scholar 

  • European Commission. (2015b). Completing Europe’s economic and monetary union. Report by Jean-Claude Juncker in close cooperation with Donald Tusk, Jeroen Dijsselbloem, Mario Draghi and Martin Schulz.

    Google Scholar 

  • European Commission. (2015c). Action plan on building a capital markets union (No. COM(2015) 468 final). Brussels.

    Google Scholar 

  • European Commission. (2015d). Economic analysis accompanying the document action plan on building a capital markets union (No. SWD(2015) 183 final). Brussels.

    Google Scholar 

  • European Commission. (2017a). Survey on the access to finance (SAFE): Analytical report 2017.

    Google Scholar 

  • European Commission. (2017b). The Rome declaration.

    Google Scholar 

  • European Commission. (2017c). Reflection paper on the deepening of the economic and monetary union. Brussels.

    Google Scholar 

  • European Commission. (2017d). Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on the mid-term review of the capital markets union action plan (No. COM(2017) 292 final). Brussels.

    Google Scholar 

  • European Commission. (2017e). Economic Analysis accompanying the document on the mid-term review of the captital markets union action plan (No. SWD(2017) 224 final). Brussels.

    Google Scholar 

  • European Commission. (2017f). Annual Report on European SMEs 2016/2017: Focus on self-employment.

    Google Scholar 

  • European Commission. (2018a). Completing the Capital Markets Union by 2019 – time to accelerate delivery (No. COM(2018) 114 final). Brussels.

    Google Scholar 

  • European Commission. (2018b). Proposal for a regulation of the European Parliament and of the Council on European Crowdfunding Service Providers (ECSP) for Business (No. 2018/0048 (COD)). Brussels.

    Google Scholar 

  • European Savings and Retail Banking Group. (2016). Financial systems in Europe and the United States: Structural differences where banks remain the main source of finance for companies.

    Google Scholar 

  • Franke, G., & Krahnen, J. P. (2017). SME funding without banks? On the interplay of banks and markets (White Paper Series No. 44). Frankfurt: SAFE – Sustainable Architecture for Finance in Europe.

    Google Scholar 

  • Gabrisch, H. (2016). Zur Kritik der Kapitalmarktunion. Wirtschaftsdienst: Zeitschrift für Wirtschaftspolitik, 96(12), 891–899. https://doi.org/10.1007/s10273-016-2067-0.

    Article  Google Scholar 

  • Gärtner, S., & Flögel, F. (2017). Zur Bedeutung und Zukunft dezentraler Banken für die KMU-Finanzierung in Deutschland. ZfKE – Zeitschrift für KMU und Entrepreneurship, 65(1–2), 41–60.

    Article  Google Scholar 

  • Gischer, H., & Ilchmann, C. (2017). CMU – a threat to the German banking sector? Vierteljahrshefte zur Wirtschaftsforschung, 86(1), 81–94.

    Article  Google Scholar 

  • Hackethal, A., & Inderst, R. (2015). Auswirkungen der Regulatorik auf kleinere und mittlere Banken am Beispiel der deutschen Genossenschaftsbanken. Gutachten im Auftrag des Bundesverbandes der Deutschen Volksbanken und Raiffeisenbanken – BVR.

    Google Scholar 

  • Hartmann-Wendels, T., Pfingsten, A., & Weber, M. (2015). Bankbetriebslehre (6. Auflage). Berlin: Springer.

    Google Scholar 

  • Hasan, I., Jackowicz, K., Kowalewski, O., & Kozłowski, Ł. (2017). Do local banking market structures matter for SME financing and performance?: New evidence from an emerging economy. Journal of Banking & Finance, 79, 142–158.

    Article  Google Scholar 

  • Hernández-Cánovas, G., & Martínez-Solano, P. (2010). Relationship lending and SME financing in the continental European bank-based system. Small Business Economics, 34(4), 465–482.

    Article  Google Scholar 

  • Hofmann, G. (2013). Kreditgenossenschaften – Stabilitätsanker in der Finanz- und Staatsschuldenkrise. Zeitschrift für das gesamte Genossenschaftswesen, 63(2), 95–114.

    Article  Google Scholar 

  • Ipsos Mori. (2011). SMEs’ access to finance survey 2011: Analytical report.

    Google Scholar 

  • Jõeveer, K. (2013). What do we know about the capital structure of small firms? Small Business Economics, 41(2), 479–501.

    Article  Google Scholar 

  • Juncker, J.-C. (2014). A new start for Europe: My agenda for jobs, growth, fairness and democratic change: Political Guidelines for the next European Commission. Opening statement in the European Parliament Plenary Session, Straßbourg.

    Google Scholar 

  • Kaserer, C. (2015). Finanzierung der Realwirtschaft im Zeichen einer Kapitalmarktunion – Handlungsempfehlungen für die Politik. Gutachten im Auftrag der Finanzplatz München Initiative (FPMI).

    Google Scholar 

  • King, R. G., & Levine, R. (1993). Finance, entrepreneurship and growth. Journal of Monetary Economics, 32(3), 513–542.

    Article  Google Scholar 

  • Kraemer-Eis, H., & Lang, F. (2017). Access to funds: How could CMU support SME financing? Vierteljahrshefte zur Wirtschaftsforschung, 86(1), 95–110.

    Article  Google Scholar 

  • Kwok, C. C. Y., & Tadesse, S. (2006). National culture and financial systems. Journal of International Business Studies, 37(2), 227–247.

    Article  Google Scholar 

  • La Porta, R., Lopez-De-Silanes, F., Shleifer, A., & Vishny, R. W. (1997). Legal determinants of external finance. The Journal of Finance, 52(3), 1131–1150.

    Article  Google Scholar 

  • La Porta, R., Lopez-De-Silanes, F., Shleifer, A., & Vishny, R. W. (1998). Law and finance. Journal of Political Economy, 106(6), 1113–1155.

    Article  Google Scholar 

  • Lee, N., Sameen, H., & Cowling, M. (2015). Access to finance for innovative SMEs since the financial crisis. Research Policy, 44(2), 370–380.

    Article  Google Scholar 

  • Levine, R. (2002). Bank-based or market-based financial systems: Which is better? Journal of Financial Intermediation, 11(4), 398–428.

    Article  Google Scholar 

  • McGuinness, G., & Hogan, T. (2016). Bank credit and trade credit: Evidence from SMEs over the financial crisis. International Small Business Journal, 34(4), 412–445.

    Article  Google Scholar 

  • Meister, M. (2015). Die neue Rolle von Verbriefungen in Deutschland und Europa. Zeitschrift für das gesamte Kreditwesen, 18, 19–21.

    Google Scholar 

  • Mills, K., & McCarthy, B. (2016). The state of small business lending: Innovation and technology and the implications for regulation.

    Google Scholar 

  • Mitter, C. (2012). Banken in der Krise kleiner und mittlerer Unternehmen – ein Forschungsüberblick. ZfKE – Zeitschrift für KMU und Entrepreneurship, 60(4), 261–293.

    Article  Google Scholar 

  • Molina-Azorín, J. F., López-Gamero, M. D., Pereira-Moliner, J., & Pertusa-Ortega, E. M. (2012). Mixed methods studies in entrepreneurship research: Applications and contributions. Entrepreneurship & Regional Development, 24(5–6), 425–456.

    Article  Google Scholar 

  • Morck, R., & Nakamura, M. (1999). Banks and corporate control in Japan. The Journal of Finance, 54(1), 319–339.

    Article  Google Scholar 

  • Moritz, A., Block, J. H., & Heinz, A. (2016). Financing patterns of European SMEs – an empirical taxonomy. Venture Capital, 18(2), 115–148.

    Article  Google Scholar 

  • Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187–221.

    Article  Google Scholar 

  • Ossig, C. (2015). Capital markets union: Process and priorities – A financial industry perspective. In A. R. Dombret (Ed.), Institute for law and finance series: Vol. 17. The European capital markets union. A viable concept and a real goal? Berlin: De Gruyter.

    Google Scholar 

  • Petersen, M. A., & Rajan, R. G. (1994). The benefits of lending relationships: Evidence from small business data. The Journal of Finance, 49(1), 3–37.

    Article  Google Scholar 

  • Pott, O., & Pott, A. (2015). Entrepreneurship. Berlin: Springer.

    Book  Google Scholar 

  • Rajan, R. G. (1992). Insiders and outsiders: The choice between informed and arm’s-length debt. The Journal of Finance, 47(4), 1367–1400.

    Article  Google Scholar 

  • Schumacher, S., & Paul, S. (2017). Capital markets union – promising prospects for corporate financing? Schmalenbach Business Review, 18(3), 289–304.

    Article  Google Scholar 

  • Song, F., & Thakor, A. (2013). Notes on financial system development and political intervention∗. The World Bank Economic Review, 27(3), 491–513.

    Article  Google Scholar 

  • Ständer, P. (2016). Nach dem Brexit – was wird aus der Kapitalmarktunion (Policy paper no. 181). Berlin: Jacques Delors Institut.

    Google Scholar 

  • Tadesse, S. (2002). Financial architecture and economic performance: International evidence. Journal of Financial Intermediation, 11(4), 429–454.

    Article  Google Scholar 

  • Véron, N., & Wolff, G. B. (2016). Capital markets union: A vision for the long term. Journal of Financial Regulation, 2(1), 130–153.

    Article  Google Scholar 

  • Wegerich, I., & Krümpelmann, R. (2017). Der neue EU-Wachstumsprospekt. BondGuide – Der Newsletter für Unternehmensanleihen, 9, 24–25.

    Google Scholar 

  • Wegerich, I., & Recklin, E. (2018). Wertpapieremissionen bis 8 Mio. EUR künftig prospektfrei. BondGuide – Der Newsletter für Unternehmensanleihen, 8, 33–34.

    Google Scholar 

  • Ziegler, T., Shneor, R., Garvey, K., Wenzlaff, K., Yerolemou, N., Rui, H., & Zhang, B. (2018). Expanding horizons: The 3rd European alternative finance industry report.

    Google Scholar 

Download references

Acknowledgements

We would like to thank the anonymous reviewers for their constructive comments as well as Yvonne Hess (INFINMENT GmbH), Thomas Stewens (Executive Board BankM—Representation on FinTech Group Bank AG) and Ingo Wegerich (President of Interessenverbandes kapitalmarktorientierter kleiner und mittlerer Unternehmen e.V. (“Kapitalmarkt KMU”) as well as Partner of Luther Rechtsanwaltsgesellschaft mbH) for the participation in the interviews that were conducted for the empirical part of this paper.

Author information

Authors and Affiliations

  1. University of Siegen, Siegen, Germany

    Arndt Werner, Michael Torben Menk & Florian Neitzert

Authors
  1. Arndt Werner
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Michael Torben Menk
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Florian Neitzert
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Florian Neitzert .

Editor information

Editors and Affiliations

  1. Trier University, Trier, Germany

    Alexandra Moritz  & Joern H. Block  & 

  2. Fulda University of Applied Sciences, Fulda, Germany

    Stephan Golla

  3. University of Siegen, Siegen, Germany

    Arndt Werner

Rights and permissions

Reprints and permissions

Copyright information

© 2020 Springer Nature Switzerland AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Werner, A., Menk, M.T., Neitzert, F. (2020). The European Capital Markets Union and its Impact on Future SME Financing. In: Moritz, A., Block, J.H., Golla, S., Werner, A. (eds) Contemporary Developments in Entrepreneurial Finance. FGF Studies in Small Business and Entrepreneurship. Springer, Cham. https://doi.org/10.1007/978-3-030-17612-9_2

Download citation

Publish with us

Policies and ethics

Search

Navigation