## Revitalizing Securitization for Small and Medium-Sized Enterprises in Europe

_Staff Discussion Notes, May 1, 2015_

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## Bibliographic details
- Authors: Shekhar Aiyar, Ali J Al-Eyd, Bergljot B Barkbu, Andreas Jobst
- Published: May 1, 2015
- Series: Staff Discussion Notes
- DOI: https://doi.org/10.5089/9781498397643.006

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### Background
- SMEs account for a disproportionate share of output and employment in Europe and remain highly dependent on bank finance, which "dried up or became prohibitively expensive during the crisis."
- Broader access to alternative, long-term finance through securitization is identified as a means to limit SME exposure to banking sector difficulties and help revive credit.

### Key findings
- Development of a well-functioning and liquid securitization market in Europe is impeded by multiple factors, requiring a comprehensive, multi-faceted strategy.
- Effective revival depends on regulatory reform, infrastructure development, and targeted, time-bound official sector support.
- A pan-European definition of high-quality securitization (HQS) is needed, centered on "simple, transparent and efficient asset structures" that would receive preferential regulatory treatment.

### Strategy and required measures
- Regulatory differentiation:
  - Greater regulatory differentiation between securities of different quality and underlying asset structures.
- Legal and reporting harmonization:
  - Harmonized national enforcement and insolvency frameworks.
  - Standardized reporting requirements.
- EU institutional capacity:
  - Greater capacity of EU authorities to support new issuance.
- Official sector support:
  - Targeted and time-bound official sector support to underpin market development.

### Expected outcomes and rationale
- Broader securitization markets would provide SMEs with alternative, long-term funding sources and reduce dependence on bank lending.
- Preferential treatment for HQS instruments would help channel investor demand toward transparent, high-quality securitizations.

### Definitions and terminology emphasized
- High-quality securitization (HQS): a pan-European definition comprising simple, transparent and efficient asset structures receiving preferential regulatory treatment.
- Relevant subject areas: Banking, Collateral, Credit, Economic sectors, Financial institutions, Financial services, Loans, Money, Securitization, Small and medium enterprises.
- Key keywords preserved from the source: 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.

*Revitalizing Securitization for Small and Medium-Sized Enterprises in Europe, Staff Discussion Notes No. 2015/007.*

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_Source: https://www.imf.org/en/publications/staff-discussion-notes/issues/2016/12/31/revitalizing-securitization-for-small-and-medium-sized-enterprises-in-europe-42859_