INNOVATIVE SOLUTIONS EFFECTIVE SME FINANCING IN THE CONTEXT OF THE RECOVERY AFTER THE GLOBAL CRISIS

SMEs represent one of the most efficient engines of growth, capable to sustain innovation in recovery after crisis periods. SMEs are characterized by high growth potential but also high risk, high information asymmetry, and vulnerability to shocks. The higher risk is transferred into liquidity problems and into an impossible scalability of financing mechanisms in relation large firms. Because of their important contribution to growth, it is necessary a special focus on the strategies capable to facilitate active SME financing through a mix of classic and innovative mechanisms. The low level of funding capacities is explained by high transaction costs and credit risk, information asymmetry and a shortage of collateral. Credit enhancement should be provided also through additional channels including credit guarantee funds. The use of capital market instruments is restricted by another problem, namely the diffculty to secure SME financing.