Irish small and medium firms will face increased challenges accessing credit because foreign lenders have been pulling out of the market.
This is according to new research from the Central Bank.
The report indicates the withdrawal of foreign banks has increased the market share of domestic players.
The research says the change in the market share of lenders "is likely to exacerbate, as opposed to ease, SME credit constraints ."
"Foreign banks' share of the private sector credit stock peaked just as the crisis began and has been falling since, indicating that in times of crisis foreign market participants react by more aggressively reducing exposure than domestic banks," the report said.
It added that by international standards the market for providing credit to firms is already highly concentrated and is likely to become "even more concentrated."
Policy measures such as the Government's loan guarantee scheme, microfinance fund and credit register should help to mitigate these adverse effects somewhat. But the Central Bank warns that challenges will remain in the medium term.
