SME access to market-based finance across Eurozone countries

This paper provides an in-depth analysis of small and medium enterprise (SME) access to capital markets across Eurozone countries. First, we determine which factors-at firm and country level-influence the likelihood of SME access to market-based finance. Second, we construct an index of market suitability to indicate the percentage of firms potentially fit for market-based finance. Our results suggest that while several Eurozone countries have realised SMEs' 'potential' for capital market financing, a large number of firms fit for market-based finance remain unexploited. We also find that overall business conditions-measured by GDP growth, the development degree of domestic financial markets and the quality of the legal and judicial enforcement system-considerably influence a firm's market suitability. In the studied period (2009-2014), macro-economic and institutional factors tended to reduce the likelihood of SMEs accessing market-based finance in most countries in our sample.