Page 25 - IMDR MSME BOOK 2021

Managing Finance in Micro, Small & Medium Enterprises
De Haas and Van Horen (2010) analyzed the syndicated
loan market and how banks adjust their lending
behaviour during a nancial crisis and found that the
reduction in bank lending during the crisis can at least
partly be attributed to banks’ increased monitoring and
screening efforts.
Jimenez, Ongena, Peydro and Saurina (2012) found for
their sample of Spanish rms that bank balance-sheet
strength determines loan approval in crisis times. Firm
balance-sheet strength determines loan granting in good
as well as in crisis times but matters more during the
latter. Patten, Rosengard and Johnston (2001) found
nearly no effects on repayment behaviour in the
micronance portfolio, while non-performance rates
increased considerably in the SME portfolio suggesting
that micro loans are less risky in times of crises
compared to SME loans.

Di Bella (2011) argued that banks’ lending to micro,
small and medium enterprises in emerging countries
and their customers were mostly resilient to the effects of
previous nancial crises, whereas they are more likely to
be affected by the recent crisis because they have also
become more globally integrated in the past decade.
Rajan (1992) studied the impact of nancial crises on the
loan portfolio of MSME banks. Banks facing liquidity
shortages may be forced to cut down lending. At the
same time banks might be reluctant to reject loan
applications of existing borrowers even in times of crisis
because they have invested in costly information
acquisition.
Ayadi & Fanelli (2011) argued that the constraints in
access to nance are an impediment to MSME
development, which rests on the combination of three
pillars: enhanced capacities, an enabling environment
and appropriate nancing conditions.