Table 14: Basel III and SMEs’ access to finance: Panel of firms

|VARIABLES|(1)|(2)<br>Acc|(3)<br>ess tofinanc|(4)<br>e as a constr|(5)<br>aint|(6)|
|---|---|---|---|---|---|---|
|Basel Dummy Gest|-0.162|-0.146|-0.464**|-0.462***|-0.224|-0.439**|
|Initial conditions|-1.066***|-1.080***|-1.114***|-1.128***|-1.161***|-1.156***|
|ES gap|-0.267**|-0.274**|-0.146|-0.114|-0.050|-0.127|
|Employees||0.002***|0.002***|0.002***|0.003***|0.003**|
|Age||-0.000|-0.000|-0.000|-0.000|-0.000|
|Foreign owners share (%)||0.002|0.002**|0.002*|0.001|0.002|
|Government-owned share (%)||-0.000|-0.003|-0.004|-0.027|-0.000|
|Direct exports share (%)||-0.000|-0.001|-0.001|-0.001|-0.000|
|Annual sales paid after delivery (%)||0.001|0.000|-0.000|-0.000|0.001|
|Log of GDP per capita (constant 2005<br>US$)|||0.269**|0.323***|0.330***|0.245|
|Getting Credit|||-0.003|-0.004|-0.003|-0.007**|
|Enforcing Contracts|||0.029***|0.033***|0.039***|0.032***|
|Financial Crisis Dummy|||-0.395***|-0.545***|-0.696***|-0.563***|
|Bank capital to total assets (%)||||0.041***|0.042**|0.031|
|Bank overhead costs to total assets (%)||||-0.026|-0.027*|0.007|
|Bank return on equity (%)||||-0.007*|-0.011*|0.005|
|Bank loan loss reserves to total assets||||-0.000|-0.002|0.026**|
|(%)|||||||
|Observations|2,808|2,808|2,808|2,808|1,391|1,417|
|Countries|20|20|20|20|20|20|
|Pseudo R-squared|0.141|0.143|0.150|0.153|0.152|0.164|
|Selection equation|||||||
|Log of GDP (current US$)|0.941|0.941|0.941|0.941|1.108*|0.764|
|Foreign bank assets among total bank|-0.002|-0.002|-0.002|-0.002|0.004|-0.006|
|assets (%)|||||||
|G20 Developing Dummy|1.900|1.900|1.900|1.900|1.399|2.391**|
|Observations|2,808|2,808|2,808|2,808|1,391|1,417|
|Countries|20|20|20|20|20|20|
|Pseudo R-squared|0.422|0.422|0.422|0.422|0.393|0.472|

Notes: This table presents the estimates of the effect of Basel III implementation on the firm’s subjective assessment of access to finance, which was estimated with an ordered logit and for both the bank-firm linked and unlinked panel sample. The models were estimated with the Heckman selection model – with the selection equation being estimated with a logit model. Standard errors are clustered at the country level are in parentheses. Column (5) presents the results for the firms that both had a bank account and loan, while column (6) shows the results for the firms with bank account but without loan. ES = Enterprise Survey; GDP = gross domestic product; SMEs = small and medium enterprises. *** indicates significance at 1% level, ** at the 5% level, and * at the 10% level.

Finally, we conduct robustness checks. We estimate regressions for which we redefine the dependent variable into two categories—whether the access to finance improved (eased) or did not change or worsened. We estimate these additional regressions using the multinomial logit model and present them in table A.7, in the appendix. We find that Basel III implementation could have intensified the worsening of access to finance for many SMEs and curtailed any progress in easing the access to finance constraints for SMEs. But the significance of the latter result does not reach common statistical levels. Next, we exclude the African countries from our sample and re-estimate 34