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Tuesday, December 4, 2012

Last modified: Tuesday, December 4, 2012

IU Kelley School co-hosting conference on small business finance at European Central Bank

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Dec. 4, 2012

BLOOMINGTON, Ind. -- Indiana University's Kelley School of Business is co-sponsoring a research conference Dec. 13 and 14 on small business finance at the European Central Bank in Frankfurt, Germany.

The current financial crisis and recessions in Europe and the United States have significantly heightened interest in small business finance, said Gregory F. Udell, the Chase Chair of Banking and Finance at the Kelley School and co-organizer of the conference.

There is considerable concern among policymakers that small firms everywhere are vulnerable to a "funding gap" -- the inability to obtain sufficient external funding to finance ongoing operations and invest in valuable new business opportunities.

The conference is expected to attract about 60 scholars and policymakers from around the United States, Asia and Europe.

The Kelley School and the European Central Bank are co-sponsoring the conference with the Centre for European Policy Research, a leading economic think tank; and the Review of Finance, the journal of the European Finance Association.

"Not surprising, small business is an important policy issue in every country," Udell said. "As important as it was in our election, certainly in terms of the rhetoric, it is if anything more important in Europe, because the fraction of business that runs through the small- and mid-sized company sector is even bigger in Europe than it is in the United States."

Depending on one's definition, about 40 to 45 percent of jobs in the United States are at small businesses. In Europe overall, its share of the labor force is larger, but it varies by country.

Previous research indicates that the funding gap may be related to the opacity of small firms, and that this problem has become more acute during the crisis.

"It's more difficult, for example, for lenders to see what's going on inside a small business, understand how risky it is, and monitor that company as opposed to a large company," Udell said. "That's because there's a lot more information available about large companies than small companies ... which are harder to understand by an outsider, such as a venture capitalist or a banker."

Udell is co-organizing the conference with Steven Ongena, a professor in the Tilburg School of Economics and Management in the Netherlands; and Alexander Popov, research economist at the European Central Bank.

Nine papers will be presented at the conference and published in the Review of Finance. Topics will include:

More information about the conference is available on the European Central Bank's website.

Editors: To arrange for an interview with professor Udell, contact George Vlahakis at 812-855-0846 or Registration for the conference is closed.

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