HGSMEs & Innovation “Access to Finance” Module A Proposal for a Pilot Survey Questionnaire (Draft)

T HE O BJECTIVES OF THE P ILOT S URVEY P. Sicari OECDStatistics Directorate Detecting and Tracking Financing Gaps ! The Main Objective: What for an approach? Limited advantages from a static approach: the analysis of financing gaps must vary according to firm size and sector of activity Collateral Objective: Determining wether debt and equity finance vehicles display a different impact on firms’ growth, taking firm size and sector of activity into account

T HE S URVEY ’ S T ARGET 1.Because of their pioneering role in economic growth. 2.Because of their easier access to risk capital, that allows for a fair comparison of the (allegedly) different impacts of debt and equity finance on growth. P. Sicari OECDStatistics Directorate

M AIN F EATURES OF THE S URVEY Q UESTIONNAIRE (1) P. Sicari OECDStatistics Directorate Two different but parallel level of analysis: Growth-Oriented Investments and Expenditures Financing Vehicles The survey will highlight not only the firms’ demand for every category of financing vehicle, but also its causal link to specific forms of investments!

M AIN F EATURES OF THE S URVEY Q UESTIONNAIRE (2) P. Sicari OECDStatistics Directorate Firms will be requested to specify: The total amount of new Growth-Oriented Investments and Expenditures made during the reference year. The amounts of new Growth-Oriented I&Es directed to the following sub-categories: ICT, PRODUCT, PROCESS and HUMAN RESOURCES. How, in percentage terms, the 4 amounts of the previous point were subdivided into (suggested) components.

M AIN F EATURES OF THE S URVEY Q UESTIONNAIRE (3) P. Sicari OECDStatistics Directorate Firms will be requested to specify: How new Growth-Oriented Investments and Expenditures were financed, by indicating the total amount covered through Debt and/or Equity finance. How, in percentage terms, total amounts of Debt and Equity were subdivided into single Debt and/or Equity financing vehicles. Whether planned Growth-Oriented I&Es have been somehow affected by an inability in borrowing sufficient funds.

M AIN F EATURES OF THE S URVEY Q UESTIONNAIRE (4) P. Sicari OECDStatistics Directorate Specific sections surveying the relationship between firms and debt/equity finance providers. Objective ? Trying to determine the exact source of possible financing gaps: Are they demand-side or supply-side?

M AIN F EATURES OF THE S URVEY Q UESTIONNAIRE (4 BIS ) P. Sicari OECDStatistics Directorate How to define the exact nature of financing gaps? o By exactly determining the temporal sequence of active and passive interventions of all possible finance providers (Who was the first provider the firm applied to? Successfully or unsuccessfully?) o By demanding the firm to indicate all possible reasons that could explain its failure in reaching agreements with debt and/or equity providers

T HE P OLICY I MPLICATIONS (1) P. Sicari OECDStatistics Directorate SMEs FINANCE PROVIDERS Usually claim they have a restricted access to financing due to shortage of supply Claim there is plenty of “unplaced” financing due to low average quality of firms’ investment projects

T HE P OLICY I MPLICATIONS (2) P. Sicari OECDStatistics Directorate POLICY MAKERS Demand-Side Oriented Supply-Side Oriented What policy to foster Access to Finance? Policies aiming at easing access to bank loans for HGISMEs, usually by means of state guarantee schemes. Policies aiming at improving HGISME investment readiness and fostering the quality of their growth strategies.

T HE P OLICY I MPLICATIONS (3) P. Sicari OECDStatistics Directorate POLICY MAKERS ….the Current Situation…… Absolute prevalence of supply-side- oriented supporting policies Increasing commitment towards rationalization of public spending

T HE P OLICY I MPLICATIONS (4) P. Sicari OECDStatistics Directorate …to conclude, an example of the main policy issues addressed by the survey questionnaire:  If almost all public policies supporting SME’s access to finance aim at reducing restrictions by compensating finance providers for higher operational risks;  and if, as it seems to be, there is no clear evidence of any global shortage of financial resources to invest: Aren’t we by chance just fuelling market imperfections by not focusing on the demand-side in order to improve the investment readiness of firms, while preferring to act through risk compensation schemes that might produce inefficient spending??? (additional resources would flow right were they are already available)