The European Capital Markets Union and its Impact on Future SME Financing

Abstract

Small- and medium-sized enterprises (SMEs) are facing enormous changes in the European financial sector. A growing number of international businesses are being confronted with a shift in financing towards international sourcing opportunities. Thus, to make international capital markets more attractive to European SMEs, the European Commission is currently implementing 33 new measures (the European Capital Markets Union). The goal of these measures is to incentivise more capital market-based forms of financing. However, the question of whether these new measures will also lead to an effective improvement in new venture and growth financing has not been answered. Our article intends to fill this gap in the research literature by applying a mixed-method approach focussing on experts (interviews) and SME firms (survey). We find that the Capital Markets Union will by no means make regional banking systems superfluous with regard to future SME financing. We conclude that banks and capital markets can only contribute significantly to stabilising the European financial system by complementing each other.