FSB Final SME Financing Report

On Nov. 29, FSB issued final report on impact of reforms on SMEs.

  • Follows FSB Jun. 2019 issued consultation on impact of reforms on SMEs, see #61269.
  • Final Report
  • Final report on the impact of G20 financial regulatory reforms on SME financing, and an overview of responses to its Jun. 2019 consultation, along with technical appendix.
  • Evaluation examines the effects of the post-crisis G20 reforms on financing of SMEs.
  • Motivated by the need to better understand the effects of the reforms on the financing of real economic activity and their contribution to G20 objective of economic growth.
  • Given that banks are the primary providers of external SME financing, most relevant reforms implemented to date are initial Basel III capital and liquidity requirements.
  • Consistent with FSB framework, other reforms relevant for SME financing that are at an earlier implementation stage/that are national in nature were analysed qualitatively.
  • Findings
  • For reforms in scope, the evaluation finds no material and persistent negative effects on SME financing in general, although there is some differentiation across jurisdictions.
  • There is some evidence that the more stringent risk-based capital requirements under Basel III slowed pace and in some jurisdictions tightened conditions of SME lending.
  • Effects are not homogeneous across jurisdictions, are generally found to be temporary.
  • Evaluation also provides some evidence for a reallocation of bank lending towards more creditworthy firms after introduction of reforms, but this is not specific to SMEs.
  • SME Lending
  • SME lending growth has resumed recently, but volumes remain below pre-crisis level.
  • Access to external finance appears to have improved, e.g. in advanced economies.
  • Stakeholder feedback suggests that SME financing trends are largely driven by factors other than financial regulation, such as public policies and macroeconomic conditions.
  • Any potential costs found in this evaluation, which appear limited and transitory, should be framed against the wider financial stability benefits of the G20 reforms.
  • Found significant benefits in reducing likelihood and severity (lost output) of crises.

Regulators FSB
Entity Types B/D; Bank; Corp; IA; Ins; Inv Co; SIFI
Reference Rp P291119-2, Rsp P291119-3, 11/29/2019' CP P070619-1
Functions Financial; Reporting; Risk; Treasury
Countries Global Regulator
Products Banking; Corporate; Equity; Insurance; Investment Bank; Issuance/IPO; Loan; Securities
Regions Global
Rule Type Final
Rule Date 11/29/2019
Effective Date 11/29/2019
Rule Id 68213
Linked to Rule :61269
Reg. Last Update 11/29/2019
Report Section International

Last substantive update on 11/29/2019