Small medium enterprises (SMEs), banks and the spatial differentiation of access to finance

This paper examines the relevance of spatial differentiation on SMEs’ access to bank finance following the 2007 financial crisis

From:
Department for International Development
Published
17 October 2017
Document Type:
Journal Article
Theme:
Economic Growth
Authors:
Zhao, T, Jones-Evans, D

Abstract

By utilizing the SME Finance Monitor and a unique dataset on the geographical location of all bank branches in 11 UK economic regions, this paper examines the relevance of spatial differentiation on SMEs’ access to bank finance during the period of economic weakness following the 2007 financial crisis. We find evidence suggesting the presence of a regional-specific effect on SMEs’ access to bank finance. Our findings show that greater functional distance between bank headquarters and branches exacerbates the credit constraints faced by local SMEs although the impact of a smaller operational distance between branches and local SMEs is inconclusive, ceteris paribus. Our finding holds over a battery of robustness tests.

This is an output from the ‘Delivering Inclusive Financial Development and Growth’ project

Citation

Tianshu Zhao, Dylan Jones-Evans; SMEs, banks and the spatial differentiation of access to finance, Journal of Economic Geography, Volume 17, Issue 4, 1 July 2017, Pages 791–824

SMEs, banks and the spatial differentiation of access to finance

Published 17 October 2017
Contents