The European Investment Bank and SMEs: key lessons for Latin America and the Caribbean
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The European Investment Bank and SMEs: key lessons for Latin America and the Caribbean
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This paper discusses the engagement of the European Investment Bank Group (EIB Group) with the financing and support of SMEs, both within the European Union (EU) as well as EU Candidate Countries and the Balkans. Indeed, lending and providing financial support to SMEs is one of the key core objectives of the EIB Group. The main focus of the paper is to describe and analyse the practises and experiences of the EIB Group in this field, to discuss the key lessons and to make policy recommendations to be considered within the Latin America and Caribbean (LAC) context. The large role played by the EIB Group in financing SMEs in Europe shows the significance of the role the public sector needs to, and can, play in providing direct financial support to SMEs - as well as helping catalyse private financing to them, for example via bank guarantees and other risk-sharing instruments - given the large market imperfections and gaps in private financial markets for SMEs, particularly credit markets. This is the case in general, but has become particularly evident in the crisis, where the EIB Group has played an important countercyclical role in credit provision, in the face of sharply falling private credit to SMEs. It is noteworthy that the valuable role that public financial institutions need to play has been increasingly recognized since the crisis at the level of multilateral development banks (MDBs) and regional development banks (RDBs). It is important that similar conclusions are also applied to national development banks.