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Title: Bank financing of small and medium size enterprises : an empirical investigation of credit rationing in Poland (1989-1995)
Author: Pawlowska, Agata E.
ISNI:       0000 0004 2747 9832
Awarding Body: University of Birmingham
Current Institution: University of Birmingham
Date of Award: 1997
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This dissertation concentrates on the issue of relationship between the banking industry and the small and medium size enterprises (SMEs, for short) in the early years of transition of the Polish economy (1989-95). In particular the problem of credit rationing of and discrimination against SMEs by the commercial banks is investigated. We attempt to find out whether credit rationing by banks have contributed to the widening/maintenance of the 'gaps' in financing SMEs. We endeavor to explore the extent to which credit rationing has impinged on the development and expansion of the Polish SMEs. Because credit rationing and finance gaps can stem from imperfections/failures on either demand-side (SMEs) or supply-side (banks), or both, our intention is to examine both of them to get a complete and comprehensive picture. In this thesis we bring together two branches of the theoretical and empirical literature: The first strand explores the issue and real implications of credit rationing, and the second one concentrates on the rationale, scope and effects of finance gaps. The analysis is based on two type of data: (1) aggregated data published by the National Statistical Office and the central bank; and (2) micro-data collected by means of a questionnaire distributed amongst SMEs and banks. This thesis consists of six chapters and is organized as follows. Chapter I introduces the topic of credit rationing by reviewing the literature of this subject and provides the terminology, and definitions employed in the subsequent chapters. Chapters II and in are focused on the development and financing of the SME sector, whereas Chapters IV and V discuss the commercial banking sector development and lending policies. The first chapters of each pair rely on macroeconomic data, while the second ones analyze the responses to the aforementioned questionnaires. Discussion in each chapter is supported by a comprehensive data provided in specified Appendices. At the end of Chapters III and V we attempt to summarize the most important lessons and assess whether the evidence collected supports the main hypothesis delineated above. Chapter VI offers some concluding remarks and suggests policy recommendations to improve the bank-business relationships. The findings of this dissertation generally confirmed the hypothesis of weak and strong credit rationing of SMEs exercised by the banking industry in the first years of transition in Poland. Although the results are far from conclusive, they are sufficiently important to give the credit rationing issue policy relevance. Our suggestions for closing the gap between demand and supply of finance to SMEs consisted of three parts: (1) what the financial system should do to improve the quality and quantity of services, and products provided; (2) what actions the government should undertake to increase competition, reduce uncertainty, and increase availability of funds to the SME sector; and (3) what SMEs can do to be perceived as more reliable and creditworthy. If the banks are to play a significant role in the economic recovery and growth, which, as the experiences of other countries have shown, is mainly facilitated by strong development and expansion of an efficient SME sector, increased and coordinated efforts to improve the relationships between those two sectors are essential and the involvement of all interested parties is required. The long-term benefits of consistent policies promoting sound banking and efficient enterprise sector by far exceed the short-term costs.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available