Small Business Economics

, Volume 41, Issue 3, pp 717-732

First online:

Bank loan terms and conditions for Eurozone SMEs

  • Konstantinos DrakosAffiliated withDepartment of Accounting and Finance, Athens University of Economics and Business Email author 

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The evolution of bank loan price and non-price terms and conditions (T&Cs) for the 2009–2011 period are investigated using firm-level survey data for a sample of Eurozone small and medium-sized enterprises. The raw firm responses, which are of a discrete nature denoting tightening or easing of the T&Cs, or no change at all, are modeled by a bivariate ordered probit model. According to the results obtained, there are sizeable differences between countries, with the protagonists of the sovereign debt crisis (Greece, Ireland, Portugal, Spain) exhibiting predicted probabilities of tightening that are considerably above the Eurozone average. In addition, price T&Cs exhibit a substantial tightening over time. Finally, firms’ net interest expenses and profitability emerge as important determinants in explaining the cross-sectional variation in bank loan T&Cs that they face.


Bank loan Bivariate ordered probit Terms and conditions Small and medium enterprises

JEL Classifications

C25 G21 L26