SME Access to Finance and Monetary Policy of the ECB

The objective of this thesis is to provide new insights into determinants of firm access to finance, and the role of the European Central Bank's (ECB) monetary policy. Not only do we describe and analyze the determinants of access to finance, but we focus on the theory of financial intermediation, as well. The key part analyses European Commission (EC)/ECB survey data for 16 euro area economies from 11 survey waves in the period from 2009 to 2014. We build our model using traditional firm-level variables such as firm size and age as well as a novel measure of the ECB's monetary policy stance - the shadow rate. We hypothesize that smaller and younger firms with decreased profitability over the past 6 months and increased leverage over the same period are more likely to report problems with access to finance. Our results are intuitively consistent with theoretical expectations and also show that the looser the monetary policy of the ECB is, the lower the composite financing gap indicator. Interestingly, we do not confirm the existence of risk taking channel of the monetary policy. Overall, we make use of the most recent survey data, extend the dataset, and use modified methodology for our estimation