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The global financial crisis and the ensuring flight away from risk have affected credit flows towards various groups of firms to different degrees, depending on their size, location and risk features.
In such a context, small and medium-sized enterprises (SMEs) are particularly vulnerable to the credit crunch due to their heavy dependence on bank credit, and limited recourse to financial markets. Firms with the weakest financial structure and lower credit rating, such as SMEs, suffer most.
This is of great concern to governments as SMEs are the backbone of OECD economies accounting for up to 97% of firms, between 40 and 60% of GDP, and up to 70% of employment in OECD countries (and even higher percentages in non OECD countries).
As confidence is restored on the financial markets, resources available for SMEs to grow out of the credit crisis are likely to remain scarce as economies enter a recessionary phase.
In response to the financial and economic turmoil, SME & Entrepreneurship policymakers are taking measures and call for a coordinated international initiative.
On the occasion of the 34th Session of the OECD Working Party on SMEs and Entrepreneurship (WPSMEE) held in late October 2008, policymakers responsible for SMEs and entrepreneurship engaged in a preliminary exchange of views on the impact of the global crisis on SME and entrepreneurship financing, and discussed the strategies adopted by governments so far in dealing with the problem and what should be done next. Among the questions were the following:
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Do Basel 2 rules, as well as international accounting standards for firms’ balance sheets, need to be rethought, or revised?
At the end of this discussion, the WPSMEE decided to organise an OECD High-Level Round Table on Financing SMEs in the first quarter of 2009. The round table will gather together the main stakeholders and high-level decision makers from governments, financial institutions and SMEs, to address the existing obstacles to SME and entrepreneurship financing, and propose short- to medium-term solutions.
Country interventions during the discussion, and associated information, is available at the following links:
The intervention and the summary of the Tour de Table by Professor Salvatore Zecchini, Chair of the Informal Steering Group on SME & Entrepreneurship Financing of the WPSMEE and President of the Italian Institute for Industrial Promotion (IPI), is also available at the following link:
Professor Zecchini’s intervention and summary of the Tour de Table
NB: The Steering Group guided and supervised the WPSMEE study on “The SME Financing Gap: Theory and Evidence” carried out for the 2006 Brasilia Conference and its output “The OECD Brasilia Action Statement for SME & Entrepreneurship Financing”.
For further information, please contact the SME Division.
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