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ECB Survey on SMEs Shows Lack of Customers a Bigger Issue than Access to Finance

Date: 27 April 2011
Written by Richard Reid

As is often the case in the wake of a financial crisis, a key issue which emerges is the access to finance for small and medium-sized enterprises (SMEs). Governments, keen to promote growth, tend to worry that financial institutions which may have contributed to the crisis may not be doing enough to support economic activity. Of course some financial institutions will argue that constraints on their lending activities may emanate from the range of proposed measures to guard against future crises as well as the uncertainty surrounding what the new measures will actually be and how much it will cost to implement them. It is also true that lending is driven by demand and supply and hence some of what may be perceived as a lack of supply may in fact be a lack of demand in the face of uncertain economic conditions. So such surveys, as has just been published by the European Central Bank (ECB), are useful guides to what is driving borrowing and lending to the corporate sector.

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