Getting left behind? The localised consequences of exclusion from the credit market for UK SMEs

Marc Cowling; Ross C. Brown; Weixi Liu; Augusto Rocha

doi:10.1093/cjres/rsad033

Getting left behind? The localised consequences of exclusion from the credit market for UK SMEs

Marc Cowling, Ross C. Brown^*, Weixi Liu, Augusto Rocha

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

Abstract

Recent research has identified a key subset of the business population that comprises firms who had sought external finance but subsequently withdrew from the credit market completely despite still requiring finance. Utilising the UK’s Longitudinal Small Business Survey between 2015 and 2020, we identify the consequences in terms of lost jobs and sales of these small- and medium-sized enterprises (SMEs) dropping out of the credit market for finance. We conduct our analysis at the regional and sub-regional level and found that around 230,000 SMEs have dropped out of the UK credit market and that in many localities this has reduced job creation and sales income growth. We conclude that this exclusionary borrowing behaviour will add further to existing regional and sub-regional economic inequalities in the UK, making the ‘levelling up’ agenda a very elusive policy objective.

Original language	English
Pages (from-to)	181–200
Number of pages	19
Journal	Cambridge Journal of Regions, Economy and Society
Volume	17
Issue number	1
Early online date	19 Oct 2023
DOIs	https://doi.org/10.1093/cjres/rsad033 https://doi.org/https://academic.oup.com/cjres/article/17/1/181/7324752
Publication status	Published - Mar 2024

Keywords

SMEs
Credit markets
Scarring
Sub-Regional
Jobs

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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10.1093/cjres/rsad033Licence: CC BY
https://academic.oup.com/cjres/article/17/1/181/7324752Licence: CC BY-NC-ND

Cowling_2023_CJRES_Localisedconsequences_CCBY
Copyright © The Author(s) 2023. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (https://creativecommons.org/ licenses/by/4.0/), which permits unrestricted reuse, distribution, and reproduction in any medium, provided the original work is properly cited.
Final published version, 455 KBLicence: CC BY

Finance and Under-Investment Impact: Understanding how constraints on access to finance and under-investment impact on productivity growth in smaller firms
Brown, R. C. (PI)
Economic & Social Research Council
4/07/22 → 3/07/25
Project: Standard

Cite this

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title = "Getting left behind? The localised consequences of exclusion from the credit market for UK SMEs",

abstract = "Recent research has identified a key subset of the business population that comprises firms who had sought external finance but subsequently withdrew from the credit market completely despite still requiring finance. Utilising the UK{\textquoteright}s Longitudinal Small Business Survey between 2015 and 2020, we identify the consequences in terms of lost jobs and sales of these small- and medium-sized enterprises (SMEs) dropping out of the credit market for finance. We conduct our analysis at the regional and sub-regional level and found that around 230,000 SMEs have dropped out of the UK credit market and that in many localities this has reduced job creation and sales income growth. We conclude that this exclusionary borrowing behaviour will add further to existing regional and sub-regional economic inequalities in the UK, making the {\textquoteleft}levelling up{\textquoteright} agenda a very elusive policy objective.",

keywords = "SMEs, Credit markets, Scarring, Sub-Regional, Jobs",

author = "Marc Cowling and Brown, {Ross C.} and Weixi Liu and Augusto Rocha",

note = "Funding: The authors wish to acknowledge the funding they received for the project from the Economic and Social Research Council (ESRC) grant number ES/W010259/1.",

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T1 - Getting left behind? The localised consequences of exclusion from the credit market for UK SMEs

AU - Cowling, Marc

AU - Brown, Ross C.

AU - Liu, Weixi

AU - Rocha, Augusto

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KW - Credit markets

KW - Scarring

KW - Sub-Regional

KW - Jobs

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Getting left behind? The localised consequences of exclusion from the credit market for UK SMEs

Abstract

Keywords

UN SDGs

Access to Document

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Projects

Finance and Under-Investment Impact: Understanding how constraints on access to finance and under-investment impact on productivity growth in smaller firms

Cite this