New research published by Trinity College today shows that firms in Ireland have the greatest non-application rates with banks because of fear of rejection.
The research indicates that many companies who might well have good projects and which might make attractive loan prospects will not apply to banks for loans for fear of being rejected.
A survey looked at 6,287 small and medium companies across nine Eurozone states. It found that non-application for fear of rejection placed Ireland at the top with 44% followed by Germany (24%), Greece (19%), Belgium (18%), Austria (17%) and Spain (17%).
Professor in Finance at Trinity’s Business School, Brian Lucey commented, "Banks and governments need to do more to educate firms as to the credit available and to persuade banks to look at firms on their books which have not followed their peers in borrowing."
He added, "This is not to advocate pushing credit on unwilling customers - it is to suggest that we should focus more on those who could borrow for good projects but who do not."