Access to Credit of SMEs in the Czech Republic During the Financial Crisis and in the Post-crisis Period

Abstract

We investigate the impact of the financial crisis on the access of small and medium-sized enterprises in the Czech Republic to external financing. We apply the non-parametric kernel density estimation on a firm-level measure of financing constraints and evaluate its distribution on a balanced panel of SMEs. We focus on financing constraints related to financial health of companies since they determine the commercial banks’ lending behaviour. Our results reveal that firms were more constrained during the crisis and their financing constraints did not largely improve after the end of financial crisis. We argue that enterprises were financially constrained during the crisis because of reduced cash-flow and cash holdings.

Keywords

• financing constraints
• KZ index
• credit crunch
• financial accelerator
• nonparametric estimation
• kernel density