Revitalizing Securitization for Small and Medium-Sized Enterprises in Europe

By Shekhar Aiyar, Ali J Al-Eyd, Bergljot B Barkbu, Andreas Jobst

May 1, 2015

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Shekhar Aiyar, Ali J Al-Eyd, Bergljot B Barkbu, and Andreas Jobst. Revitalizing Securitization for Small and Medium-Sized Enterprises in Europe, (USA: International Monetary Fund, 2015) accessed November 8, 2024

Disclaimer: This Staff Discussion Note represents the views of the authors and does not necessarily represent IMF views or IMF policy. The views expressed herein should be attributed to the authors and not to the IMF, its Executive Board, or its management. Staff Discussion Notes are published to elicit comments and to further debate.

Summary

Small and medium-sized enterprises (SMEs) account for a disproportionate share of output and employment in Europe but are still highly dependent on bank finance, which dried up or became prohibitively expensive during the crisis. Broader access to alternative, long-term finance through securitization would limit their exposure to banking sector difficulties and thus help revive credit. The SDN examines the various impediments to the development of a well-functioning and liquid securitization market in Europe and proposes a comprehensive multi-faceted strategy to support its development through regulatory reforms and infrastructure development together with targeted and time-bound official sector support. This would require (i) greater regulatory differentiation between securities of different quality and underlying asset structures; (ii) harmonized national enforcement and insolvency frameworks and standardized reporting requirements; and (iii) greater capacity of EU authorities to support new issuance. These measures would be underpinned by a pan-European definition of high-quality securitization (HQS) comprising simple, transparent and efficient asset structures receiving preferential regulatory treatment.

Subject: Banking, Collateral, Credit, Economic sectors, Financial institutions, Financial services, Loans, Money, Securitization, Small and medium enterprises

Keywords: Asset structure, Collateral, Credit, Credit risk, EU action, EU budget, EU country, EU funds, EU initiative, EU regulation, EU resource, Europe, Financial intermediation, Loans, Macro-financial linkages, Portfolio funding, Purchase program, Restarting securitization, SDN, Securitization, Securitization market, Securitization structure, Securitization transaction, Small and medium enterprises, SME finance, SME loan, SME securitization, Structured finance

Publication Details

Pages:

35
Volume:

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DOI:

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Issue:

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Series:

Staff Discussion Notes No. 2015/007
Stock No:

SDNEA201507
ISBN:

9781498397643
ISSN:

2617-6750

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