SME Reliance on Bank Debt in France

This study has a double objective. First, it investigates determinants of SME reliance on bank debt in France, considering a series of firm-related characteristics. Second, it focuses on possible differences within the SME group, developing a methodology which separates the analysis for small and medium-sized firms. The sample, consists of 2 222 SMEs studied over a period going from 2003 to 2006. The empirical analysis leads to several interesting results. In particular, it shows that even if SMEs have the possibility of financing their tangible assets by bank debt, they face difficulties to access this source of funding to finance, inter alia, their investment opportunities. These difficulties appear harder for smaller firms. This paper extends the existing literature, assessing differences within the SME group in France. It provides also useful insights for academics, practitioners and policy makers, increasing the understanding of SME reliance on bank financing.