- Friday 2nd March 2012, Radisson Blu Hotel, Golden Lane, Dublin 8, 9am-5.30pm.
The Central Bank of Ireland will host a conference on SME lending on March 2nd 2012. This conference will combine work by Central Bank of Ireland researchers on the Irish SME lending market with research from international experts in the area.
The conference will comprise four sessions as follows:
Session 1: The Irish SME segment in context – importance in the Irish economy, allocation across sectors, competition in lending, loan performance.
Session 2: Keynote Speech: Gregory Udell (Kelley School of Business, Indiana University)
Session 3: Credit Access – the role of relationship lending, securitization, foreign ownership.
Session 4: Loan performance and default modelling.
Confirmed presenters and papers:
Tara McIndoe Calder, Fergal McCann, Reamonn Lydon, Martina Lawless (Central Bank): The importance of SMEs in Irish economic activity
Stuart Fraser (Warwick Business School): SME access to finance: disentangling risk aversion from true credit risk.
Fergal McCann, Tara McIndoe-Calder (Central Bank): modelling borrower-level determinants of default in SME loans.
Sarah Holton, Martina Lawless, Fergal McCann (Central Bank of Ireland): SME credit access in the European crisis.
Thorsten Beck (University of Tilburg): The impact of foreign bank ownership on SME lending methods.
Santiago Carbó-Valverde (University of Granada): SME credit access: the role of securitization.
A full and precise program will be provided nearer to the event. Admission to the conference is free, but must be reserved by emailing patricia.kearney at centralbank.ie with “SME conference” in the subject line.
12 replies on “Central Bank of Ireland Conference: The Irish SME lending market: Descriptions, Analysis and Prescriptions.”
It would make the day more interesting if tickets could only be made available via a loan from one of the pillar banks.
After 2 years of credit drought then it might be possible to assume that the remaining SMEs are used to and can survive the current conditions. The ones that couldn’t are probably all gone already 🙁
Modelling borrower level default determinants? Equations are probably correctly solved but are the equations describing the real world? Not sure what this is about but I’ve never been a big fan of having one model (or possible point of failure) for a large system.
Disentangling risk aversion from true credit risk? Sounds like telling people that they should take more risks than they are comfortable with.
The relationship lending can be an interesting subject. Can be very good but for some banks in Ireland it turned out to be very very bad.
You jest, surely.
IMHO the extent of insolvency, though not declared, in the SME is staggering. In many cases banks are being paid back by the expediency of not paying other creditors, including preferential ones like the revenue. A six months payment period is not longer unusual.
As there are usually no net assets left in these situations, using legal means to recover debts is worse ta useless. This is because the trade creditor must pay the liquidator if there are no assets in the insolvent company.
In typical Irish company law fashion, many companies have ‘ceased trading’ but have no legal obligation to liquidate the company despite owing millions. Many continue to trade in essentially the same business, using sister companies or parent companies within the same group, committing no offence it would appear.
In fact many individual do not want to be paid in cheques or direct to bank. The reason is that the banks use the money to reduce the loans outstanding, with other creditors including on occasion staff going unpaid.
In summary I would say we are nowhere close to the end of company and business failures. Reading Galbraith’s ‘The Great Crash’, the US experience was that there were large numbers of failures even as the economy started to emerge from recession.
“In typical Irish company law fashion, many companies have ‘ceased trading’ but have no legal obligation to liquidate the company despite owing millions. Many continue to trade in essentially the same business, using sister companies or parent companies within the same group, committing no offence it would appear.”
Its almost like the big two political parties tolerated inadequate commercial law because that was in the interests of their bank rollers while not being in the interest of a functional economy.
Said it before and said it again. FF and FG are as equally indictable for the inadequacy of the systems and laws in place.
You can’t even lead that horse to water (SME’s borrowing from the banks).
I regularly network with other small business owners. I have seen plenty of evidence with my own eyes that a lot of them out there have effectively ‘shrink wrapped’ themselves and may still appear to be open but are just idling over while their owner is doing anything he/she can to make some money to pay the bills (e.g. bar work, van deliveries, gone off to the UK to make some dosh for a couple of months, etc.). People are just living on hope that something will improve soon but as we all know, hope is not a strategy.
There is little appetite out there for any further borrowing in this sector and you can make all the targets you like for bank lending to SME’s but if they want to avoid the banks, they will… and they do. It’s come to something when people would rather gargle battery acid than talk to their bank.
I personally know of two small businesses (two man companies) that have effectively ‘relocated’ to the UK because a) they only see ‘ten years of austerity in Ireland’ ahead of them and b) if it should still go under, at least they will be subject to UK bankruptcy laws, not Irish ones.
I’ve also been talking to a number of providers of instant/serviced offices lately and their clients have been leaving in droves (you can pick up a very cheap serviced 1-5 person office these days and they will haggle too).
In addition to this, larger companies are putting the most amazing squeeze on smaller companies who are suppliers. Often asking for prices to be halved (that is not an exaggeration – been on the end of that one myself). This is more to do with being opportunistic than the survival of the larger company.
One assumes that the tax take from the smaller company/self employed is going to drop off a cliff this year? I’m not sure what percentage of the overall tax take that accounts for and whether it would cause a significant impact on the overall deficit situation. Maybe the gov knows that and it’s why they’ve been chasing the pensioners!! Got to make that shortfall up somewhere or heaven forbid, that Citibank economist might be right and we are going to need another bailout.
What? No session dedicated to the Credit Review Board and the wonderful work they are doing?
Credit Reviewer John Trethowan says that reviews by the office to date has resulted in €1.77m in credit being made available to the SME applicants and 223 jobs being protected.
The fourth report on the activity of the Credit Review Office show that it reviewed 76 applications since it was set up just over a year ago. In 22 cases the bank’s decision was upheld, while in 23 cases its decision was disputed and the bank subsequently provided credit.
taken from an RTE link http://www.rte.ie/news/2011/0523/credit-business.html (May 2011 first year in operation) because their website is down http://www.creditreview.ie/
I worked in Credit Risk in Ireland when the times were good in Ireland. Even in those times I believed that the commercial realities regarding credit were bad.
I believe that what Joseph Ryan and PR Guy are saying to be true about how it works in the bad times.
I might add that I believe the laws are too debtor friendly until you get to the personal bankruptcy and then the laws are too draconian. If it would be cheaper to use the courts to recover small debts then the small problem of a small debt can quickly be resolved instead of as is now: Small debts accumulate, small debts grow and after some time trade creditors, employees and banks are facing large problems with large losses.
Increased probability of recovering money makes it easier to justify giving credit, the debtor friendly legislation creates the opposite situation.
Plenty of experts on this conference, how many of them have practical experience?
I thought this was interesting, from the FT
“This industry (banking) is run by entirely the wrong people now,” says Prof Hahn. “It is not that they are idiots but, for three decades with only small intervals, you succeeded by growing your business and piling on risk. The new regime is about efficiency and cost and none of them knows about that.”
The Amazing part of the Conference is that 4 of the Speakers are from outside the country and the remainder are Public Servants. Is it any wonder the Central Bank made such a “cock up ” of Bank Regulation. It might help if they included representatives of the SMEs.
Despite what Joseph Ryan and PR Guy state there are lots of SMEs who have not got their head in the sand and their businesses need credit as do their customers. There is only one Bank open for business in Ireland at present and the Central Bank shut down the Credit Unions from lending with their restrictions which has made matters worse. There are few Public Servants or Academics who understand business so I would not waste time with this unless you happen to be a banker or clueless journalist grovelling to spread bad news.
I note that one of the topics is “The importance of SMEs in Irish economic activity”. There is not a Politician or CS/PS in this country that gives a tuppeny damn about SMEs and the Self Employed. Most people in this sector long ago decided that the only way forward is to paddle your own canoe.
Interesting article in the IT but no mention of forced deleveraging which is also presumably crucifying SMEs.
“We need to see cash flow in the mortgage market and I do not see that happening. The conditions have created conditions which mean many people will not qualify for a mortgage.” Things like the occasional credit blip, recent employment after a period without a job or contract-only positions in line with public service recruitment bans are all working against people.”
“Despite what Joseph Ryan and PR Guy state there are lots of SMEs who have not got their head in the sand and their businesses need credit as do their customers. ”
I’m not trying to imply that all SME’s are in trouble or are avoiding the search for credit …. but I bet my ‘lots’ are starting to outnumber your ‘lots’. I run one and I associate with lots of people who run one and it is bloody dire out there. Thankfully, my business doesn’t owe any banks any money and I don’t need overdraft facilities but I’m rare.
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