Informal Financing of Small – Medium Enterprise Sector: The Case of Greece

Journal of Service Science and Management, Vol. 2, No. 4, pp. 378-383, December 2009

Posted: 21 Dec 2009

See all articles by Panagiotis Petrakis

Panagiotis Petrakis

National and Kapodistrian University of Athens

Konstantinos Eleftheriou

University of Piraeus

Abstract

In this paper, we attempt to find a “channel” through which Greek economy can exhibit a relative “resistance” in a credit crunch. For this purpose, we specify an error correction model so as to test the relationship between corporate bank loans and commercial papers comprised of post-dated cheques and bills of exchange. The results show that corporate bank loans and cheques - bills of exchange are substitutes. This finding combined with the fact that in Greece, the issuance of these papers is positively connected with the informal economic activity which in turn rises during economic downturns, has a strong economic implication regarding the ability of Greek economy to partly “amortize” the shocks connected with the current financial crisis.

Keywords: Corporate Finance, Credit Crunch, Shadow Financing

JEL Classification: G01, G30

Suggested Citation

Petrakis, Panagiotis and Eleftheriou, Konstantinos, Informal Financing of Small – Medium Enterprise Sector: The Case of Greece. Journal of Service Science and Management, Vol. 2, No. 4, pp. 378-383, December 2009, Available at SSRN: https://ssrn.com/abstract=1525411

Panagiotis Petrakis (Contact Author)

National and Kapodistrian University of Athens ( email )

5 Stadiou Strt
Athens, 10562
Greece

Konstantinos Eleftheriou

University of Piraeus ( email )

Department of Economics
Karaoli and Dimitriou 80
Piraeus, ATTIKI 18534
Greece

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