The latent demand for bank debt:characterizing discouraged borrowers

Freel, Mark and Carter, Sara and Tagg, Stephen and Mason, Colin (2012) The latent demand for bank debt:characterizing discouraged borrowers. Small Business Economics, 38 (4). pp. 399-418. ISSN 0921-898X

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Abstract

Concerns that small firms encounter credit constraints are well entrenched in the literature, despite widespread empirical evidence that a relatively small proportion of small firms have their loan applications rejected. However, many firms may be discouraged from applying for fear of rejection. These businesses are the focus of this paper. Based on responses to a large-scale postal survey of UK small and medium-sized enterprises (SMEs), we find that twice as many businesses were discouraged from applying for a bank loan than had their loan request denied. More particularly, we observe a number of distinguishing characteristics of “discouraged borrowers” (relative to applicants). These include: strategy, sector, prior entrepreneurial experience and banking relationships. The implications of our findings for policy and future research are briefly discussed.

Item Type:
Journal Article
Journal or Publication Title:
Small Business Economics
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/asjc/2000/2002
Subjects:
ID Code:
64246
Deposited By:
Deposited On:
26 Apr 2013 08:45
Refereed?:
Yes
Published?:
Published
Last Modified:
20 Oct 2020 02:28