Funding vs. Real Economy Shock : The
            Impact of the 2007-2009 Crisis on Small Firms' Credit
            Availability

Berg, Gunhild; Kirschenmann, Karolin

Funding vs. Real Economy Shock : The Impact of the 2007-2009 Crisis on Small Firms' Credit Availability

Autores

Berg, Gunhild

Kirschenmann, Karolin

Editor

World Bank, Washington, DC

Descripción

This paper analyzes the impact of two distinct shocks stemming from the cross-border transmission of the 2007-2009 crisis on credit availability for small firms. The paper uses data from AccessBank Azerbaijan which was affected in its liquidity position during the second and third quarters of 2008 by delays in its refinancing. The Azeri real economy was hit by the global crisis from the fourth quarter of 2008 onwards with a combined decline in oil prices, exports, remittances, and domestic demand. Therefore, a pure supply side shock con be contrasted with a real economy shock that hit exactly when the bank's funding position strengthened again. The paper finds that during the funding shock (potential) borrowers are discouraged from applying for loans. However, for those applications made, the likelihood of loan approval is not affected. The real economy shock, in contrast, reduces the approval likelihood for SME loans in particular, while agro and micro loans are considerably less affected. Finally, bank relationships increase credit availability in good as well as in bad times.

Palabras clave

ACCESS TO CREDIT, ACCESS TO EXTERNAL FINANCE, ACCOUNTING, AGRICULTURAL SECTOR, APPROVAL RATE, AVAILABILITY OF CREDIT, BALANCE SHEET, BANK BRANCH, BANK CREDIT, BANK LENDING, BANK LIQUIDITY, BANKING ASSETS, BANKING SECTOR, BANKING SERVICES, BANKS, BOND, BOND ISSUE, BORROWER, BORROWING, BRANCHES, BUSINESS ACTIVITY, BUSINESS BORROWERS, BUSINESS FINANCES, BUSINESS LENDING, BUSINESS LOAN, BUSINESS LOAN APPLICATIONS, BUSINESS LOANS, CAPITAL LOANS, CAPITAL MARKETS, CENTRAL BANK, CHANNELS OF CREDIT, COLLATERAL, COMMODITY PRICE, COMPETITIVE MARKETS, CONSUMER FINANCE, CORRUPTION, CREDIT ACCESS, CREDIT APPROVAL, CREDIT AVAILABILITY, CREDIT CONSTRAINTS, CREDIT CRUNCH, CREDIT PORTFOLIO, CREDIT PORTFOLIOS, CREDIT QUALITY, CREDIT RATIONING, CREDIT RISK, CROSS-BORDER BANKING, CURRENCY DEVALUATION, CURRENCY MISMATCHES, DEBT, DEBT SERVICING, DEFAULT RATES, DEPENDENT, DEPOSIT, DISBURSEMENT, DIVERSIFICATION, DUMMY VARIABLE, DUMMY VARIABLES, ECONOMIC CONDITIONS, ECONOMIC CRISIS, ECONOMIC GROWTH, ECONOMIC POLICY, ECONOMIC SITUATION, EMERGING MARKET, EMERGING MARKET ECONOMIES, EMERGING MARKETS, ENTERPRISE DEVELOPMENT, EXPANSION, EXTERNAL SHOCKS, FAMILIES, FARMERS, FEDERAL RESERVE, FEDERAL RESERVE BANK, FEMALE BORROWERS, FINANCIAL ANALYSIS, FINANCIAL CONSTRAINTS, FINANCIAL CONTAGION, FINANCIAL CRISES, FINANCIAL CRISIS, FINANCIAL DEVELOPMENT, FINANCIAL DISTRESS, FINANCIAL INSTITUTIONS, FINANCIAL INTEGRATION, FINANCIAL INTERMEDIATION, FINANCIAL LIBERALIZATION, FINANCIAL LITERACY, FINANCIAL MARKETS, FINANCIAL PERFORMANCE, FINANCIAL SERVICES, FINANCIAL SITUATION, FINANCIAL SYSTEMS, FIRM PERFORMANCE, FIRM SIZE, FIRST LOAN, FIXED ASSETS, FOREIGN BANK, FOREIGN BANK ENTRY, FOREIGN CURRENCY, FOREIGN CURRENCY RISK, FORMAL FINANCE, GENDER, GOOD BANK, HARD CURRENCY, HOLDING, HOUSEHOLDS, HOUSING, HOUSING PRICES, INCOME STREAMS, INDIVIDUAL ENTREPRENEURS, INDIVIDUAL LOAN, INFORMATION SYSTEM, INFORMATIONAL ASYMMETRIES, INTEREST RATE, INTERNATIONAL BANK, INTERNATIONAL BANK LENDING, INTERNATIONAL CAPITAL, INTERNATIONAL CAPITAL MARKETS, INTERNATIONAL DIVERSIFICATION, INTERNATIONAL ECONOMICS, INTERNATIONAL FINANCIAL INSTITUTIONS, INTERNATIONAL MARKETS, LARGE FIRMS, LENDER, LEVELS OF CREDIT, LEVELS OF DEBT, LINES OF CREDIT, LIQUIDITY, LIQUIDITY POSITION, LIQUIDITY PROBLEMS, LIQUIDITY SUPPORT, LOAN, LOAN AMOUNT, LOAN AMOUNTS, LOAN APPLICATION, LOAN APPLICATIONS, LOAN APPROVAL, LOAN APPROVAL RATES, LOAN CATEGORY, LOAN CHARACTERISTICS, LOAN CLIENTS, LOAN CONTRACT, LOAN DEMAND, LOAN MARKET, LOAN OFFICER, LOAN OFFICERS, LOAN PORTFOLIO, LOAN PRODUCT, LOAN REQUEST, LOAN REQUESTS, LOAN SIZES, LOAN TERMS, LOAN VOLUMES, LOCAL BANK, LOCAL CURRENCY, LOCAL MARKET, LOCAL MARKETS, MARKET ECONOMIES, MARKET SHARE, MARKETING STRATEGY, MATURITY, MEDIUM ENTERPRISES, MICRO BORROWERS, MICRO CREDIT, MICRO ENTREPRENEURS, MICRO FINANCE, MICRO LOAN, MICROENTERPRISES, MICROFINANCE, MICROFINANCE INSTITUTIONS, MICROFINANCE SECTOR, MIGRATION, MORTGAGE, MULTINATIONAL, MULTINATIONAL BANKS, NATURAL DISASTERS, NUMBER OF BANKS, OIL PRICES, PLEDGE COLLATERAL, POOL OF BORROWERS, PORTFOLIO QUALITY, POTENTIAL BORROWERS, PRIVATE CAPITAL, REAL ESTATE, REMEDY, REMITTANCES, REPAYMENT, REPAYMENT BEHAVIOR, RETURN, RETURN ON EQUITY, RISK FACTORS, RISK SHARING, RISKY BORROWERS, RURAL FINANCIAL INSTITUTIONS, SAVINGS, SAVINGS BANKS, SAVINGS PRODUCTS, SHAREHOLDERS, SMALL BUSINESS, SMALL BUSINESSES, SMALL ENTERPRISES, SMALL FIRMS, SME, SME CLIENTS, SME FINANCE, SME LENDING, SUPPLIERS, SUPPLY OF FINANCE, TRADE SECTOR, TRANSITION ECONOMIES, TRANSPARENCY, TRANSPORT, URBAN AREAS, VALUE OF COLLATERAL, WORKING CAPITAL