The Impact of Various Economic Factors in accessing Finance within the Business Sector: Cases from UK Financial Services Companies

Saghir, Marouan and Aston, John (2017): The Impact of Various Economic Factors in accessing Finance within the Business Sector: Cases from UK Financial Services Companies. Published in: International Journal of Applied Business and Management Studies , Vol. 2, No. 2 (25 June 2017): pp. 16-25.

Abstract

This paper investigates the impact of various economic factors such as inflation, interest rate, financial crises, and government regulations on the access to finance in the business sector specifically considering the financial experts' perspective operating in the UK financial services companies. The study examines the relationship between variables of interest in post recession period. Total five out of top fifty British Financial Services' Companies were selected through convenience sampling. Additionally, 38 respondents were selected through purposive sampling, based on their knowledge, level of management, and experiences in the sector. The findings showed that interest rate, government regulations, and financial crises have significant relationship in accessing financial resource. Interestingly, 83% remain neutral about the relationship between inflation and raising funds.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inflation, interest rate, government regulation, financial crises, economic factors
• Subjects: D - Microeconomics > D0 - General; D - Microeconomics > D0 - General > D04 - Microeconomic Policy: Formulation, Implementation, and Evaluation; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E69 - Other; F - International Economics > F3 - International Finance > F32 - Current Account Adjustment ; Short-Term Capital Movements; F - International Economics > F3 - International Finance > F38 - International Financial Policy: Financial Transactions Tax; Capital Controls; F - International Economics > F6 - Economic Impacts of Globalization > F68 - Policy

References

Agyapong, D. and Darfor, K. N. (2011). Criteria for assessing Small and Medium Enterprises’ Borrowers in Ghana. International Business Research, 4 (4): 132-138.

Barth, J., Caprio, G. and Levine, R. (2005). Rethinking Bank Regulation and Supervision: Till Angels Govern. New York: World Bank and Cambridge University Press.

Berger, A. and Udell, G. (2006). “A more complete conceptual framework for SME finance. Journal of Banking and Finance, 30 (11), 2945-2966.

Block, J. H. and Sandner, P. G. (2009). What is the Effect of the Financial Crisis on Venture Capital Financing? Empirical Evidence from US Internet Start-Ups.

Bulman, T and Simon, J. (2003). Productivity and Inflation. Reserve Bank of Australia. 8-38.

Ehrmann, M. (2000). Firm size and monetary policy transmission: evidence from German business survey data. European Central Bank, Frankfurt, Germany.

Faizan, R., and Haque, A. (2015). Bullwhip Effect Phenomenon and Mitigation in Logistic Firm's Supply Chain: Adaptive Approach by Transobrder Agency, Canada, International Journal of Supply Chain Management, 4(4), 43-51.

Friedman, M. and Schwartz, A., J. (1970). Monetary Statistics in the U.S. Estimates, Sources, Method. New York: National bureau of Economic Research (NBER).

Ganbold, B. (2008). Improving Access to Finance for SME: International Good Experiences and Lessons for Mongolia. 5-7.

Gertler, M. Gilchrist, S., (1994). Monetary policy, business cycles and the behavior of small manufacturing firms. Quarterly Journal of Economics, pp. 309-340.

Glaessner, T., Anamali, N., Claessens, S., Furst, K., Klingebiel, D., Klapper, L. and Schware, R. (2004). South Africa: Technology and Access to Financial Services: Lessons from Experience. World Bank, Washington, D.C.

Gregory, B. T., Rutherford, M. W., Oswald, S., & Gardiner, L. (2005). An empirical investigation of the growth cycle theory of small firm financing Journal of small Business Management, 43(4), 382-392.

Hughes, A. (1997). Finance for SMEs: A U.K. Perspective. Small Business Economics, 9, 151-166.

Mora, N. (2011). Can Banks Provide Liquidity in a Financial Crisis?. Available at: https://www.kansascityfed.org/publicat/econrev/pdf/10q3Mora.pdf. Last accessed 28th Aug 2016.

Rigby, J. and Ramlogan, R. (2013). Access to Finance: Impacts of Publicly Supported Venture Capital and Loan Guarantees. Available: https://www.nesta.org.uk/sites/default/files/access_to_finance_impacts_of_publicly_supported_venture_capital_and_loan_guarantees.pdf.

Ross, J. (1999). Ways of approaching research: Qualitative designs. Available at: http://fortunecity.com/greenfield/grizzly/432/rra3.htm. Schneider, C. and Veugelers, R. (2010). On young highly innovative companies: why they matter and how (not) to policy support them. Industrial and Corporate Change. 19 (4): 969–1007.

Stiglitz, J. and Greenwald, B. (2003). Towards A New Paradigm in Monetary Economics: Cambridge University Press.

Stölzle, W. and Elbert, R. (2013). Saving Measurement for Capital Equipment Purchasing: Procedures, Challenges, Contingencies, and Behavioral Aspects. Available: http://verdi.unisg.ch/www/edis.nsf/SysLkpByIdentifier/4163/$FILE/dis4163.pdf.

Valverde, S. C., Fernandez, F. R. and Udell, G. F. (2012). Trade Credit, The Financial Crisis and Firm Access to Finance. University of Granada. 1 (1), 2-10.

Vane, H. R. and Thompson, J. L. (1979) Monetarism Theory, Evidence and Policy. New York: John Wiley and Sons.

World Bank. (2008). Finance for All? Policies and Pitfalls in Expanding Access. Washington D.C. The International Bank for Reconstruction and Development / The World Bank. 23-26.

Yip, C. (2016). New regulation to give hope to SMEs rejected by banks for finance. Available: http://www.experian.co.uk/blogs/latest-thinking/new-regulation-give-hope-smes-rejected-banks-finance/.

Young, L. (2005). The Report on Small Firms 2010-2015. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/402897/Lord_Young_s_enterprise_report-web_version_final.pdf.