SMEs in Ireland: contributions, credit and economic crisis

The small and medium enterprise (SME) segment is regarded as an important contributor to sustainable economic and employment recovery due to their largely indigenous, employment-intensive nature. The recent economic, financial and employment crisis has been particularly sharply felt in this segment of the Irish economy. Taking a wide range of indicators from firm production and bank lending data, this article examines the structure of the SME sector through the pre- and post-crisis period. This highlights the central contribution of SMEs to employment and job creation, with an emphasis on the role of indigenous, non-exporting firms. Descriptive evidence on the misallocation of credit in the run-up to the 2008 crisis, along with a reallocation of lending away from those sectors with highest pre-2008 credit accumulation is also presented.