Journal of Financial Economics

REF 150 Financing SMEs: Current Situation and Prospects

The French economy is dynamic. For ten years, despite two macroeconomic shocks that were immense, both because of how close together they came and their size, the real economy has benefited from positive and balanced financing flows, in particular under the umbrella of the central bank. The number of companies has grown and they have created jobs and added value to the economy. The French productive system is moving towards larger numbers of smaller (individual) firms . At the same time labor productivity has increased. Questions are now arising given the current economic context of a third economic shock with the war in Ukraine and the corresponding return of inflation. Nevertheless, French companies, taken as a whole, have demonstrated their resilience in the past and are continuing to demonstrate it presently, as does the financial system with the ongoing involvement of the central banks.

In this paper, we analyze the effects of monetary and prudential policies on access to credit for SMEs in the eurozone and more specifically in France. First, we propose a review of the main measures that may have had an effect on loans made to SMEs over the last decade. We then present the results of a number of studies based on granular data, the experience of the crisis, and economic policy decisions that followed in order to reassess estimates of these effects. Non-conventional monetary policy operations have had a positive effect on lending to the least risky large firms and SMEs. In a highly capital constrained period, the increase in bank capital had a general depressive effect on the amount of loans made. However, as far as SMEs are concerned, this effect was limited by a targeted reduction in bank capital linked to their exposure. The positive effect of this relief is most visible for medium-sized SMEs and even very small enterprises in a number of cases where analysis has been possible.

The health and economic crisis of 2020 affected companies, especially SMEs, to different extents in different territories. This study aims to show whether and how local financial conditions impact the financial robustness of firms and whether all firms are equally subject to their effects. Based on a sample of more than 25,000 observations of Italian SMEs analyzed through a multilevel model, we show that the Altman Z-score, a classical indicator of the financial robustness of a firm, is sensitive to the presence of banks and, therefore, to the availability of credit in an area. However, this relationship does not hold in the same way for all companies. These results help to understand how the structure of the local credit market can be used to strengthen the resilience of SMEs in the event of a macroeconomic shock.

Business loans are an essential source of financing for small and medium-sized companies and very small businesses in France, and constitute the bulk of their resources. During the recent crises (subprime crisis, sovereign debt crisis, health crisis, invasion of Ukraine), apart from the exceptional measures that were put in place, business loans proved to be robust. They therefore constitute a major asset for the resilience of the French economy. This article highlights a particular feature of the financing of small and medium-sized enterprises in France, namely the importance of relationship lending, which is characterized by a small number of banking relationships per company and the exclusive sharing of information. While it is likely to increase financing costs in periods of expansion, it can significantly reduce them in times of crisis. The expected benefits could be enhanced by the development of more competitive conditions.

In Cameroon, small and medium-sized enterprises (SMEs) have a hard time gaining access to bank financing. This is due to the very high cost of credit. Relationship financing seems to be an important and effective strategy for reducing the cost of credit. The goal of this article is to analyze the effect of relationship financing on the cost of credit for Cameroonian SMEs. The study uses data from a survey of 600 Cameroonian SMEs in the cities of Douala and Yaoundé. To do this, we used the ordinary least squares (OLS) method. The results of our analyses show that relationship financing has a positive and significant effect on the cost of credit to Cameroonian SMEs as long as the banking relationship and trust last.

External growth is one of the strategies for rapidly reaching a critical size. We study 108 French SMEs in the medical laboratory sector that have made external growth investments. We show that reaching a critical size thanks to external growth generates economies of scale that improve the operating margin rate. We then note that external growth requires turning to equity financing, given that, in a sector that is consolidating, payments made with shares play a significant role that is complementary to fund-raising.

This article analyzes the behavior of business angels (BAs) according to their investment choices. Known for their role in financing young, innovative SMEs, BAs fill the financing gap in the entrepreneurial ecosystem, particularly in the seed phase. They are hands-on players and offer their skills, expertise, and personal networks to the SMEs in which they invest. They look for high-potential companies, but their behavior depends on the perceived characteristics of the entrepreneurs behind the projects. This article is based on a simultaneously conducted quantitative survey of French and Quebec BAs. We use data from both France and Quebec to gain a better understanding of this phenomenon and to compare the two national contexts.

Our article analyzes the reasons behind the choice of crowdfunding made by Moroccan Very Small Enterprises (VSE). The study concerns a sample of 50 companies and uses two methods of analysis: lexical and thematic content analysis. According to the results, the reasons vary depending on the legal framework used by the crowdfunding platform (Moroccan law platform or French law platform). This research also illustrates how these reasons are linked to the life cycle of VSEs, as well as to the forms of crowdfunding practiced in Morocco.

Loan guarantees played a central role in the fiscal response to the Covid-19 recession. A central question is whether they indeed produced the expected positive effects. We review existing empirical evaluations of the impact of loan guarantees, focusing on European Union guarantees between 2002 and 2016. The study confirms the notion that this policy supported the growth of small and medium-sized enterprises and reduced their bankruptcy rates. However, we also identify areas where this tool did not have a significant positive impact. These findings may be useful for the formulation of public policy and for assessing the effectiveness of loan guarantees in the aftermath of the Covid-19 crisis.

This study aims to provide initial empirical answers to a question that has not yet been explored in the academic literature: the effectiveness of business transfer support measures. The study focuses on loans guaranteed by Bpifrance between 2012 and 2015 that supported the financing of business takeovers. Based on data from companies and their managers, the impact analysis focuses on companies that were acquired, matching companies sold to those taken over. The study demonstrates the positive effects on economic performance (investment, revenues, EBITDA, productivity) and on the survival of SMEs that benefited from this aid. Apart from the effect on survival, the aggregated effects on employment are not very visible over the 3-year horizon, possibly due to the high short-term financial needs for funding the businesses. The extent of the impact nevertheless appears to be greatest for managers near retirement age, an instructive result given the context of an aging population.

Public aid for financing innovation, particularly for SMEs, has increased significantly over the last twenty years in France. It is therefore appropriate to ask to what extent aid earmarked for RDI has achieved the goals it was designed for. A review of three recent evaluations of direct RDI aid mainly destined for SMEs concludes that in general there was no windfall effect. It seems that individual and collaborative RDI aid makes it possible for beneficiaries to access complementary financing (both public and private) while boosting their RDI efforts (R&D spending, R&D investments, R&D jobs, and other employees). By financing phases that come earlier in the innovation process, collaborative projects seem to significantly stimulate the patenting performance of SMEs and ISEs, although these effects vary according to the form of collaboration and the kind of partner involved. An effect on economic development (total sales, value added, etc.) is also visible, but only for the individual aid programs.

SMEs make a major contribution to added value and employment in France. Although their managers are generally aware of the need to implement an ambitious climate strategy, few of them have done so. Funding and technology have been the two main obstacles. Within the framework of the European Green Deal, the regulation aimed at redirecting financial flows towards sustainable activities has currently been only marginally successful in meeting this goal as regards private financing through debt or equity. Government intervention in the form of support and financing is increasingly present, both for established SMEs and for start-ups that are introducing disruptive innovations. This government funding has followed the findings of recent academic research on the effects of direct public investment and actions taken by public investment banks on the commitment of private actors. A real impetus needs to be amplified and accelerated within a European framework to enable SMEs to meet the challenges of the coming years.

Since 2015, Bpifrance's accelerators have been selective, intensive, cohort-based support programs for business leaders consisting of three pillars—training, consulting, and networking. In this article, we report on three studies carried out between 2019 and 2022 to assess their effects on the performance of companies that have been helped. One evaluation focused on the first three accelerator programs aimed at SMEs and launched between 2015 and 2017. A second evaluation extended the scope of the analysis to the first 10 accelerator programs, including regional accelerators, those targeting ISEs and the aeronautics industry accelerator, which were followed until 2019. A third study looked at the relative performance of accelerated companies in the context of the health crisis. Using different data sets and methodologies, these three studies produce converging results indicating that accelerators increase sales, investment, and employment for the accelerated companies.

This article examines financing decisions in small businesses by looking at managerial behavior. The challenge is to understand decision-making in order to better help out managers, which can only be achieved through a behavioral approach. To this end, a theoretical framework combining the theory of managerial choice and financial proxemics has been devised. Qualitative methodology based on the study of five cases has been used for this purpose. The results illustrate, on the one hand, a behavioral typology among managers in matters of financing and, on the other hand, the existence of a clearly identifiable decision process that can be broken up into sequences. These results, expressed in terms of proposals, attest to the richness of the theoretical model developed and to the relevance of using qualitative approaches for the study of financial decisions in SMEs.

We discuss the role of interconnectedness in the assessment of systemic risk. As the financial crises of recent decades have shown, measuring systemic risk represents a strategic challenge, both for governments as well for regulatory and supervisory bodies. Recent studies on this topic show that interconnectedness within financial systems, that is to say the way in which economic agents interact, is a key element of systemic risk. On the basis of an econometric study, we show the dynamics of interconnectedness in the European financial system between 2005 and 2018. We use the approach proposed by Kindleberger (1978) and Minsky (1982) to analyze the role of interconnection in a financial crisis. The interconnection spikes observed during the subprime crisis and the European sovereign crisis attest to its importance. However, whether interconnection is a precursor of a systemic crisis or a consequence remains unclear. 

Bitcoin is based above all on the logic of contract and free individual participation, but it also encompasses a collective dimension that the institutionalist approach to money helps clarify. Like any other system, this alternative payment system requires centralizing information on all transactions made so that each of them is validated in the eyes of all members of the community. It is adherence to the common rules written in the software that gives meaning to each bilateral transaction by including such adherence in this “orthogonal” social relationship that is the payment system. The apparent decentralization of Bitcoin does not prevent the emergence of coalitions of actors and regulatory bodies. Finally, the absence of any link to a state, far from illustrating the emergent thesis of an anti-statist currency, is precisely what prevents this payment system from fulfilling the fundamental functions of money. This leads us to reassess the role of the state in André Orléan's institutionalist monetary theory.