Working Paper Series: Special Edition of 2016 to 2018 Interns

with per-capita GDP and findings by Turkali & Martinis (2007) who suggested that real interest rate was found to negatively affect the demand for credit.

Table 12 (appendix 2A) summarizes the results of the logistic regression for the ECCU sub-sample for both models. For the outcome variable bank credit, it is observed that small and medium firms are less likely to access credit relative to larger firms. This is consistent with the findings of the full sample only this time it is significant for medium firms only. Firms’ performance as measured by growth in sales was found to significantly increase the odds of firms obtaining credit by 52 per cent. This is quite different from the CARICOM sample as firms’ performance was found to have no significant impact on firms’ ability to secure financing. This suggest that regional differences do have an important role to play in SME financing. Thus, further probing at the individual country level is recommended. Innovative firms were 13 per cent and firms that invested in product development were 18 per cent significantly more likely to have access to credit. Audited financial statements were found to significantly increase the likelihood of firms accessing credit by 77 per cent. University & postgrad, college & vocational, sole proprietorship, partnerships, exporters, foreign ownership, part of a larger firm and technical were found to have no significant impact on the likelihood of firms accessing credit. The country variable log of GDP per-capita significantly reduces the likelihood of firms accessing credit, which is similar to the findings of the CARICOM sample. This is an indication that financial institutions do look at the overall macroeconomic environment when deciding to lend. If they perceive that the economic outlook is negative they would tighten their lending policies, thus restricting the amount of credit available. For the outcome variable demand findings suggest that small and medium firms are less likely to apply for credit. This is consisted with the results of the full sample except that only small firms are significant. Firms registered as sole proprietors are significant and 34per cent more likely to demand credit relative to shareholding companies. Those firms that are part of a larger organization are also significant and 85per cent more likely to demand credit. Audited financial statements were

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