Tackling Small and Medium Enterprise Problem Loans in Europe

By Wolfgang Bergthaler, Kenneth H Kang, Yan Liu, Dermot Monaghan

March 30, 2015

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Wolfgang Bergthaler, Kenneth H Kang, Yan Liu, and Dermot Monaghan. Tackling Small and Medium Enterprise Problem Loans in Europe, (USA: International Monetary Fund, 2015) accessed November 5, 2024

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

The global financial crisis has left a large private sector debt overhang and high levels of non- performing loans (NPLs) in several European countries. Small and medium-size enterprises (SMEs) represent a significant and weak segment of the nonfinancial corporate sector. SMEs face a number of legal, financial, and regulatory challenges to restructuring that differ from those of larger corporates, such as a rigid and costly insolvency regime, a higher fixed cost to loan restructuring, and the lack of alternative sources of financing. Given SMEs’ large presence and close links to the banking system, addressing the SME loan problem in Europe will be critical for strengthening bank and corporate balance sheets and supporting a more robust and sustained recovery.

Subject: Asset and liability management, Banking, Debt restructuring, Economic sectors, Financial institutions, Financial sector policy and analysis, Loans, Nonperforming loans, Small and medium enterprises, Solvency

Keywords: Central bank, Debt distress, Debt restructuring, Economic recovery, EU bank regulator, EU country, EU state aid rule, Europe, Government, Government effort, Government guarantee scheme, Government support, Insolvency, Insolvency regime, Legal system, Loans, Nonperforming loans, SDN, Small and medium enterprises, Small and medium-sized enterprise, Small business, SME, Solvency

Publication Details

Pages:

38
Volume:

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DOI:

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Issue:

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Series:

Staff Discussion Notes No. 2015/004
Stock No:

SDNEA201504
ISBN:

9781498384834
ISSN:

2617-6750

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