Revitalizing Securitization For Small And Medium Sized Enterprises In Europe

Small and medium-sized enterprises (SMEs) account for a disproportionate share of output and employment in Europe but are still highly dependent on bank finance, which dried up or became prohibitively expensive during the crisis. Broader access to alternative, long-term finance through securitization would limit their exposure to banking sector difficulties and thus help revive credit. The SDN examines the various impediments to the development of a well-functioning and liquid securitization market in Europe and proposes a comprehensive multi-faceted strategy to support its development through regulatory reforms and infrastructure development together with targeted and time-bound official sector support. This would require (i) greater regulatory differentiation between securities of different quality and underlying asset structures; (ii) harmonized national enforcement and insolvency frameworks and standardized reporting requirements; and (iii) greater capacity of EU authorities to support new issuance. These measures would be underpinned by a pan-European definition of high-quality securitization (HQS) comprising simple, transparent and efficient asset structures receiving preferential regulatory treatment.

Small and medium-sized enterprises (SMEs) account for a disproportionate share of output and employment in Europe but are still highly dependent on bank finance, which dried up or became prohibitively expensive during the crisis. Broader access to alternative, long-term finance through securitization would limit their exposure to banking sector difficulties and thus help revive credit. The SDN examines the various impediments to the development of a well-functioning and liquid securitization market in Europe and proposes a comprehensive multi-faceted strategy to support its development through regulatory reforms and infrastructure development together with targeted and time-bound official sector support. This would require (i) greater regulatory differentiation between securities of different quality and underlying asset structures; (ii) harmonized national enforcement and insolvency frameworks and standardized reporting requirements; and (iii) greater capacity of EU authorities to support new issuance. These measures would be underpinned by a pan-European definition of high-quality securitization (HQS) comprising simple, transparent and efficient asset structures receiving preferential regulatory treatment.

With the European Commission’s announcement of the Capital Markets Union in 2016, a major step was at last taken to provide for the special needs of small and medium enterprises (SMEs). This book presents the first in-depth legal analysis of the challenges that SMEs have to face when managing their balance sheets and trying to attract investors, what alternative financing tools are most effective and how recent legislation reaches fair and convenient conditions for SMEs. The analysis focuses specifically on the Capital Markets Union structure and on other European initiatives that support and enhance SMEs’ raising money on capital markets in order to better diversify their investments and plan a growth and development strategy. An updated description of the European framework is provided, together with references to relevant national systems. Issues and topics covered include the following: need for long-lasting access to funds; securitization for SMEs; SME Z-score; crowdfunding; and peer-to-peer, minibond and accounts receivables financing. Case study analyses furnish a deep understanding of the financial structures and their main features. Appendices include English texts of the main European Union (EU) legal documents pertaining to SMEs. For SMEs discouraged by over-regulation designed for larger businesses, and who find themselves in difficulties when they have to face the required process, this book will prove to be of immeasurable practical value. This book represents one of the first publications on SMEs and finance and contains data and information resulting from a deep and well-focused research on the topic. The added value of this study will allow the academics to understand the main issues related to this topic and will provide for a steady basis for further research and analysis with regards to law and economics for SMEs. Furthermore, it will be also warmly welcomed by practitioners in the area of SME financing and will be useful to support them in the selection of the most appropriate tools for their clients. Banks and interested EU officials will also value its clear and straightforward approach to the subject.

This global handbook provides an up-to-date and comprehensive overview of shadow banking, or market-based finance as it has been recently coined. Engaging in financial intermediary services outside of normal regulatory parameters, the shadow banking sector was arguably a critical factor in causing the 2007-2009 financial crisis. This second volume explores three particular domains of shadow banking. The first domain deals with the macro-economic fundamentals of the respective shadow banking segments: Why do they exist, what problems do they solve and why are some of their embedded risks so persistent? The second domain captures the global dimensions of shadow banking markets, reviewing the particularities and specifics of various shadow banking systems around the world. Volume II concludes with an extensive overview of how the sector has changed since the financial crisis, focusing on regulatory arbitrage, contract imperfection and governance. Closing on unresolved issues and open-ended questions that will no doubt remain prominent in the shadow banking sector for years to come, this handbook is a must-read for professionals and policy-makers within the banking sector, as well as those researching economics and finance.

In the June 2015 issue, the Research Summaries review "Migration: An Attractive Insurance Option in African Countries" (Ahmat Jidoud) and "Investment in Emerging Markets" (Nicolas E. Magud and Sebastian Sosa). The Q&A looks at "Seven Questions on Islamic Finance” (Inutu Lukonga). The Bulletin also includes its regular listings of recent IMF Working Papers and Staff Discussion Notes, as well as information on the "IMF Economic Review." A new IMF eLibrary discussion site on energy and climate change is highlighted, along with new recommendations from IMF Publications.

This book aims to explore if and how securitization changed financial intermediation and lending behaviour by reviewing the pre- and post-financial crisis theoretical and empirical literature. The book’s distinctive feature is bringing the growing post-crisis empirical evidence to the attention of a wider audience by critically appraising it against pre-crisis arguments. With its thought-provoking insights, this book is of particular interest for students, practitioners and academics.

Interest in access to finance and awareness of its importance have increased significantly since the early 2000s. Growing evidence suggests that lack of access to credit prevents many households and firms from financing high-return investment projects, which has an adverse effect on growth and poverty alleviation. Despite the increasing awareness of the importance of access to finance among both researchers and policymakers, there are still some major gaps in our understanding of the main drivers of access, as well as about the impact of different policies in this area. This book aims to fill some of these gaps by discussing recent innovative experiences in broadening access to credit in Latin America. These experiences are consistent with an emerging new view that, while recognizing the central role of the public sector in improving the contractual and informational environment for financial markets, also contends that there might be room for well-designed, restricted interventions in collaboration with the private sector to foster the development of financial markets and broaden access to them. In particular, the book analyzes, among other things, some interesting experiences from Brazil, Chile, Colombia, and Mexico that use different instruments to broaden access to credit in a sustainable way, such as structured finance, factoring, credit guarantees, and correspondent banking. Most of these experiences have led to financial innovation by developing new financial products and coordinating different players in the financial and real sectors to overcome barriers to access to credit. The book provides a first systematic analysis of these innovative experiences, including an analytical framework to understand problems of access to finance and a discussion of the effects and optimal design of public interventions. Finally, the book discusses some open policy questions about the role of the private and public sectors (including state†?owned banks) in broadening access to finance in a sustainable and market-friendly manner.

Bringing together leading researchers from around the world, Finance and Investment considers the causes for the persistently low level of investment in Europe, examining the extent to which the financial system is a contributory factor and identifying possible remedies.