Private Credit and Bank Disintermediation among European Middle Market Firms: Evidence from ECB QSA and SAFE Data

Abstract

This thesis examines whether private credit growth in Europe has led to bank disintermediation among middle-market firms. It assesses if patterns align with substitution, complementarity, or credit expansion. The study uses ECB Quarterly Sector Accounts (2010–2022) and firm-level ECB Survey on the Access to Finance of Enterprises (2014–2022). Fixed-effects panel regressions are estimated at aggregate and country-year levels, supplemented by individual-firm and within-firm fixed-effects logit specifications. Aggregate bank credit share directionally declines but lacks conventional significance. Country year analysis shows a positive post-2015 coefficient for other-loan use among medium-sized firms, though it doesn't withstand robust statistical correction. Size-stratified analysis reveals heterogeneity: the negative association between bank dominance and other-loan use holds for medium and larger firms, but not small firms. Individual-firm analysis indicates a post-2015 rise in active other-loan use, confirmed as within-firm behavior. The evidence suggests directional substitution, primarily among medium-sized firms, rather than complementarity or credit expansion, with no aggregate total credit expansion. Disintermediation in the European middle market appears concentrated by firm size and modest in magnitude.