Small and medium-sized enterprises (SMEs) are pivotal to the global economy, particularly in Italy, where they constitute a significant portion of the industrial and service sectors. Despite their importance, SMEs often face challenges in accessing bank credit, which is crucial for their growth and sustainability.
The increasing emphasis on environmental, social, and governance (ESG) factors in financial decision-making has raised questions about how sustainability practices influence SMEs’ access to credit. This study addresses this gap by examining whether SMEs with sustainable business models enjoy better access to bank loans and improved debt servicing capabilities.
The study employs a panel data analysis of 125 listed Italian SMEs across 14 regions from 2017 to 2021. A Sustainability Business Model (SBM) score, comprising 20 items across disclosure, processes, and governance, was developed to measure sustainability practices.
Financial data were sourced from the Orbis database, while qualitative sustainability information was hand-collected from corporate reports. Key findings include:
- SMEs with higher SBM scores secured more short-term and long-term bank loans, with short-term loans being more prevalent.
- Sustainable SMEs demonstrated a stronger capacity to service their debt, as reflected in higher interest coverage ratios (ICR).
- The positive relationship between sustainability and credit access strengthened over time, likely due to evolving regulatory and market pressures post-Paris Agreement.
