ASSESSMENTS
In the Eurozone, Smaller Businesses Struggle for Financing
Apr 29, 2013 | 11:57 GMT
HANNELORE FOERSTER/Getty Images
Summary
On April 26, the European Central Bank released a report analyzing the financial situations of small and medium sized enterprises in the eurozone between October 2012 and March 2013. The report shows that access to financing differs greatly among the eurozone members, especially between the struggling peripheral economies and Germany, and that securing bank lending generally is harder for small companies than large ones. Small and medium sized enterprises are, as widely acknowledged, the backbone of the European economy. Using employment and value added as measurements, this is especially true in the struggling peripheral eurozone countries. European economies rely heavily on banks as a source of credit, compounding the crisis in countries with troubled banking sectors.
The European Central Bank's monetary policies are not sufficiently improving access to financing for small companies in struggling countries and thus the bank is likely considering alternative measures to fine-tune its policy to better serve smaller companies. However, the central bank is constrained by the eurozone's structure. Moreover, monetary policy can do little to correct structural faults such as weak international competitiveness and low domestic demand.
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