THE EFFECTS OF BANK CONSTRAINTS ON ALTERNATIVE FINANCE

The objective of this paper is to analyze bank lending constrained SMEs are more likely to use alternative financing. For this purpose, the WBES was used, which contains almost 2330 companies in seven Latin American countries for 2017. A Binary Logit model was estimated. The results show that the use of alternative financing increases when firms have supply constraints to access bank credit. In contrast, when the restrictions come from the demand side, the results differ. The main contribution of this work is to evaluate the problem of access to financing for SMEs from a different perspective, analysing the constraints on the use of alternative financing and incorporating innovative instruments, such as personal loans, which are rarely discussed in the literature.