Fourth, as many SMEs are small merchants accepting hundreds or thousands of payments every day from consumers, at physical points of sale or online, they may benefit from progress in contactless payments where a payment can be made by simply holding the mobile device or card above a merchant’s terminal.
But if equity ratios are low, debt must bear a bigger part of total risks, which makes it more expensive – at least when banks are allowed to fail. Correspondingly, higher equity ratios will lower the cost of a given unit of equity, since risks will be more widely shared, and the cost of debt will also go down.