Despite recent signs of renewed growth in the Euro Area core, economic activity remains weak in much of Europe, with risks skewed to the downside. Containing those risks will require finding ways to support small and medium-sized enterprises (SMEs), which account for disproportionately large shares of employment and value added. SMEs have been hit hard by the crisis, however, given their heavy dependence on weakened domestic markets and bank lending that has become both less available and more expensive.
To promote better understanding of the factors behind reduced financing for SMEs in Europe, Bain & Company and the Institute of International Finance (IIF) have conducted more than 140 interviews with a broad cross section of stakeholders in six Euro Area countries: France, Ireland, Italy, the Netherlands, Portugal and Spain. Interviews were also held with key European institutions. Discussions focused on identifying impediments to SME financing and exploring potential solutions. The perspectives gained were informed and shaped by listening not just to banks and banking associations but also to officials, academics, business and professional associations, and alternative providers of financing, including venture capital (VC) and pension funds, private equity (PE) and insurance firms, and exchanges.
