Credit Crunch or Loan Demand Shortage: What Is the Problem with the SMEs' Financing?

The aim of this paper is to study the determinants of bank loan applications and financial access of small and medium enterprises from 2013 to 2015. We applied binary and ordered logit models to a sample of 27.811 firms from 37 countries from the Survey on the Access to Finance of Enterprises (SAFE). We provided evidence that larger firms and those belonging to the industry sector are more likely to apply for and obtain bank loans. A puzzling result was found regarding the matter of innovation. It is relevant for both application and access to bank loans, but in opposite ways: innovation boosts external finance applications but hampers actual financial access. Furthermore, the use of retained earnings enhances financial application and the effective financial access. This could indicate that internal funds are complementary, rather than substitutes in the firms' financial structure. The results of the study are relevant to improve policies of SMEs access to finance in the European context.