The report presents the findings of an independent study by RTD Talos into ways of improving SMEs’ access to finance in Cyprus, as well as ACCA’s response and policy recommendations. It is based on a series of stakeholder interviews and member input following a global call for evidence by ACCA.
Cyprus is facing a credit and liquidity crunch unprecedented among developed countries, as the country’s disproportionately large, international financial system collapsed in early 2013. The bail-in of March 2013 was originally aimed at recapitalising Cyprus’s banks in order to return them to health, while strict capital controls (previously considered impossible in the Eurozone) were aimed at preserving their deposit base. Neither worked quite as envisaged, with evidence of sharply reduced lending, rising delinquencies and continued deposit flight throughout the country. The combination of a banking system and a government powerless to assist businesses has exacerbated what was already a very difficult situation.
In response to these challenges, ACCA launched an international Call for Evidence in March 2014, inviting local and international stakeholders, as well as its members and students, to share their views on the situation in the country and what can be done to make access to finance easier for Cypriot SMEs.
This independent study by RTD Talos elaborates on the results of the ACCA Call for Evidence and makes the following recommendations.
Cyprus’s banks should:
The government of Cyprus should consider:
With appropriate government support, credit providers can lead the development of: