The impact of the banking crisis on the availability of credit to SME’s

Abstract

This paper examines the impact the current banking crisis is having on the availability of vital credit to small and medium enterprises. Such a study is important in order to determine where the credit chain is broken and how it can be fixed. The literature review is split into three sections which examine the three theoretical frameworks; Quantitative easing, Lending plan strategies and Ratio analysis, highlight the advantages and disadvantages. It concludes by exploring the governments’ new proposal of a pillar banking system.

Interviews carried out with five local business owners further delve into the issues which surround the availability of credit. From here it shows first hand how these small businesses are dealing with the lack of credit on a daily basis and how they have adjusted their business accordingly.