No joy with banks 'round here : the geography of the usage of bank financing among UK SMEs

摘要

For many years, credit rationing has been cited as one of the major challenges universally faced by SMEs. This is thought to have important economic implications given the contributions such SMEs could make to the wider economy if they secured investment financing. Credit rationing has in the past included firms whose credit applications are rejected by banks, and discouraged bank borrowers - firms that do not seek bank credit at all, in part because they believe they would be rejected. Research into rejection and discouraged bank borrowing is abounding and a variety of policy interventions have been implemented over the years, such as government loan guarantee schemes and, more recently, direct initiatives by the UK banking industry through the Business Finance Taskforce. Such efforts have however only realised modest success. A potential shortcoming could be that since such initiatives are often implemented at the national level, they may have assumed that discouraged bank borrowing and loan rejection are evenly spread across the UK. If that was not the case, however, the limited success of initiatives to counter credit rationing could simply be attributable to a failure to deploy resources in areas and localities facing relatively higher incidences of discouraged bank borrowing and loan rejection. The purpose of this study is to draw out the geography of credit rationing among UK SMEs. The study employs the UK SME Finance Monitor data to map out the relative incidence of discouraged bank borrowing and loan rejection between local postcode areas in the UK.