Research Paper

An empirical examination of discouraged borrowers in the UK.

ERC Research Paper No 69

Associated Themes
  • Finance

This paper investigates the differences between small and medium sized firms (SMEs) that apply for funding and those that are discouraged from applying for funding – so-called discouraged borrowers. The dynamics and determinants of borrower discouragement, together with its impact on the activities of SMEs are also investigated. Data from the Longitudinal Small Business Survey suggests that one in ten SMEs (9.3%) can be classified as being a discouraged borrower or as many as half a million UK SMEs could be discouraged borrowers.