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Title: The impact of monetary policy on bank credit and trade credit for the UK's SMEs : a disequilibrium model of credit rationing
Author: Hong, Boon Ping
ISNI:       0000 0004 6349 0297
Awarding Body: University of Leeds
Current Institution: University of Leeds
Date of Award: 2017
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This thesis aims to examine the extent to which the UK's SMEs face credit rationing and to examine the impact of monetary policy on the availability of bank credit to the UK's SMEs, and the substitution relationship between bank credit and trade credit. The estimation is based on a large dataset between 1991 and 2010. Using disequilibrium model of credit rationing to estimate the impact of monetary policy is able to detangle the effect of demand from the supply and it overcome the identification problem in the previous studies of credit channel of monetary transmission. An index of monetary condition (MCI) that incorporated both interest rate and exchange rate in the estimation has been used as a measure of monetary condition in the UK. The results show that the demand for bank loans for small and medium sized firms increases when they have stronger needs of working capital and investment, lower level of internal cash flow and trade credit, and larger firm size. This is compared to micro sized firms in the sample which their demand for bank loans increase when they have more internal cash flow and trade credit, lower needs of working capital but stronger for investment, and firm size. The supply of bank loans for UK's SMEs was determined by firm risk, size, collateral, trade credit, and if it belongs to the manufacturing industry. The result also confirms that lower proportion of medium firms were borrowing constraint than micro and small firms. Based on the fixed effect panel data estimation method, the results show that small and medium sized firms that are borrowing constraint use more trade credit than unconstraint, and those borrowing unconstraint tend to extend more credit to other firms when they have access to bank credit. The results provide practical knowledge for policymakers regarding the financing of the UK's SMEs, which plays a key role in the UK economy.
Supervisor: Wilson, Nick ; Robinson, Andrew Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available