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UK credit and discouragement during the GFC

Minniti, Maria; Cowling, Marc; Liu, Weixi; Minniti, Mary; Zhang, Ning


Maria Minniti

Marc Cowling

Weixi Liu

Mary Minniti

Helen Zhang
Senior Lecturer in Management Accounting


© 2016, Springer Science+Business Media New York. The availability of credit to entrepreneurs with good investment opportunities is an important facilitator of economic growth. Under normal economic conditions, most entrepreneurs who requested loans receive them. In a global financial crisis, popular opinion is that banks are severely restricting lending to smaller businesses. This assumes that low levels of investment are caused by supply-side restrictions in the credit market. Little is said about potential changes in the demand for credit and how it is influenced by entrepreneurs’ perceptions about supply-side restrictions. One particularly interesting, and under-researched, group of small businesses is that who have potentially good investment opportunities, but are discouraged from applying for external funding as they fear rejection. In this study, we question whether these entrepreneurs were correct in their assumptions. We find that levels of discouragement are quite low in general at 2.7% of the total smaller business population. Further analysis implies that 55.6% of discouraged borrowers would have got loans had they applied.


Minniti, M., Cowling, M., Liu, W., Minniti, M., & Zhang, N. (2016). UK credit and discouragement during the GFC. Small Business Economics, 47(4), 1049-1074.

Journal Article Type Article
Acceptance Date May 13, 2016
Online Publication Date Jun 6, 2016
Publication Date Dec 1, 2016
Journal Small Business Economics
Print ISSN 0921-898X
Electronic ISSN 1573-0913
Publisher Springer Verlag
Peer Reviewed Peer Reviewed
Volume 47
Issue 4
Pages 1049-1074
Keywords small business finance, credit rationing, credit discouragement, bank lending
Public URL
Publisher URL
Additional Information Additional Information : This is a post-peer-review, pre-copyedit version of an article published in Small Business Economics. The final authenticated version is available online at:


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