New lending to SMEs was down in 2016 in 15 out of 25 countries for which comparable data were available, despite more favorable credit conditions and low-interest rates. The median interest rate charged to SMEs fell by 0.82 percentage points, in the context of loose monetary conditions, thereby continuing a downward trend that began in 2011. Survey data show that credit became more accessible in 2016, with notable exceptions including Brazil and the Russian Federation.
The use of financing instruments other than bank debt was generally on the increase in 2016. Leasing and hire purchases rose in a majority of countries in 2016, often by more than 10 percent compared to 2015. Factoring and invoice discounting volumes show a similar pattern. Venture capital investments, although well below pre-crisis levels in 2016 in many economies, increased in two-thirds of participating countries. The global private debt market grew by almost 15% between 2015 and 2016. Innovative sources of finance such as p2p lending, equity crowdfunding, and invoice trading continued to grow very rapidly in 2016. While volumes remain modest in most participating countries, these financial instruments are becoming widely used in a few countries, most notably in China, the United Kingdom, and the United States.
Demand-side issues, which are often related to weak investment dynamics, appear to explain the fall in new lending in some countries. In Italy, for example, the decline in new loans can be attributed to weak demand for credit, which reached a low in 2016. This picture is not uniform, however, and in other countries, factors such as weak macro-economic performance, risk aversion in the financial sector, and tightening credit standards can contribute to explaining the fall in new lending. In Greece, for example, the 2016 decrease in new lending can be attributed to continued weaknesses in the financial sector and a slow recovery of the economy, rather than to falling demand for credit by SMEs.