Financial Instruments

In a capitalist economy uneven development leads to a split between large­scale and small­ scale capital; the latter comprises the bulk of small and medium-­sized enterprises (SMEs). Small­ scale capital faces worse conditions in both short ­term and long ­term financing, namely in accessing both working and investment capital. Therefore, a structural fi­nancing gap appears that pertains to SMEs. To introduce the main actor of this drama, it is a common secret that bank lending is tighter, lower, at a higher price to SMEs, compared to large enterprises. Public policy steps in, in the form of financial instruments. Although these are general features of capitalism, crisis exacerbates financial difficulties, banks’ channels shut down to unprecedented levels and the urgency for state intervention is acute. SMEs financing is a matter of par­ticular concern for governments at a global level. At the EU level and in the context of an integrated policy design for the support of SMEs, as il­lustrated by the Small Business Act (SBA) (COM (2008), 394 final), there has been a clear trend in recent years advancing the use of financial in­struments beyond traditional subsidies. In Greece in particular, SMEs are more numerous, smaller and weaker, compared to other advanced countries while the last capitalist crisis was particularly severe. According to the results of the European Central Bank Survey on Access to Finance of Enterprises (SAFE), access to finance is the number one problem Greek companies have been facing during the deep prolonged crisis. Hence, the necessity for state intervention for the benefit of SMEs is well documented. Indeed, such an intervention was orchestrated. Although money was so dear at the heart of the crisis, wages and pensions were dramatically cut and the state was at the verge of official bankruptcy, a Fund was formed to address banks’ withdrawal from SMEs financing. Banks were indispensable part of this project, both in designing and implementing it. Although banks which for various reasons did not provide finance to SMEs during the economic crisis,  were called in to cover the gap that they themselves have created. This paper formulates and builds on this theoretical contradiction in order to evaluate the results of the Entrepreneurship Fund in supporting the development of SMEs. 
This paper is included in the book "THE IMPACT OF EU STRUCTURAL AND INVESTMENT FUNDS ON GREECE (1981-2019):
SUCCESSES, FAILURES, LESSONS LEARNED AND COMPARISONS WITH OTHER EU MEMBERS", published by Jean Monnet Centre of Excellence Governance and the University of the Peloponnese (2020), ISBN: 978-960-02-3694-1.