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Comparing the Impact of Credit Constraints on the Growth of SMEs in a Transition Country with an Established Market Economy

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  • John Hutchinson

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  • Ana Xavier

Abstract

In this paper we compare the role of internal finance on the growth of firms between a leading transition country, Slovenia and an established market economy, Belgium. We find that firms in Slovenia are more sensitive to internal financing constraints than their Belgian counterparts. Furthermore, we find that de novo firms and firms with long term debt are most constrained and that micro and SMES can face great difficulties in accessing external sources of finance. Foreign firms, however, are able to raise external finance and consequently their growth is less reliant on the availability of internal finance. Our findings appear to indicate that although Slovenian firms are no longer recipients of soft budget constraints, the financial environment is not yet fully functional. Copyright Springer 2006

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Bibliographic Info

Article provided by Springer in its journal Small Business Economics.

Volume (Year): 27 (2006)
Issue (Month): 2 (October)
Pages: 169-179

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Handle: RePEc:kap:sbusec:v:27:y:2006:i:2:p:169-179

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Web page: http://www.springerlink.com/link.asp?id=100338

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Keywords: financial constraints; manufacturing; transition economics; G33; P2; L6;

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References

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Citations

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Cited by:
  1. Coluzzi, Chiara & Ferrando, Annalisa & Martinez-Carrascal, Carmen, 2009. "Financing obstacles and growth: an analysis for euro area non-financial corporations," Working Paper Series 0997, European Central Bank.
  2. Petrit Gashi & Iraj Hashi & Geoff Pugh, 2014. "Export behaviour of SMEs in transition countries," Small Business Economics, Springer, Springer, vol. 42(2), pages 407-435, February.
  3. Walch, Florian & Dwenger, Nadja, 2011. "Tax Losses and Firm Investment: Evidence from Tax Statistics," Annual Conference 2011 (Frankfurt, Main): The Order of the World Economy - Lessons from the Crisis 48699, Verein für Socialpolitik / German Economic Association.
  4. Alessandra Guariglia & Xiaoxuan Liu & Lina Song, . "Internal Finance and Growth: Microeconometric Evidence on Chinese Firms," Discussion Papers 09/11, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
  5. Filipe Silva & Carlos Carreira, 2009. "No Deep Pockets: Some stylized results on firms' financial constraints," GEMF Working Papers 2009-06, GEMF - Faculdade de Economia, Universidade de Coimbra.
  6. Saso Polanec, 2004. "On the Evolution of Size and Productivity in Transition: Evidence from Slovenian Manufacturing Firms," LICOS Discussion Papers, LICOS - Centre for Institutions and Economic Performance, KU Leuven 15404, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  7. Zinych, Nataliya & Odening, Martin, 2009. "How Costly are (Agricultural) Investments during Economic Transition? A Critical Literature Appraisal," 2009 Conference, August 16-22, 2009, Beijing, China, International Association of Agricultural Economists 50319, International Association of Agricultural Economists.
  8. Mateev, Miroslav & Poutziouris, Panikkos & Ivanov, Konstantin, 2013. "On the determinants of SME capital structure in Central and Eastern Europe: A dynamic panel analysis," Research in International Business and Finance, Elsevier, Elsevier, vol. 27(1), pages 28-51.
  9. Blandina Oliveira & Adelino Fortunato, 2006. "Firm Growth and Liquidity Constraints: A Dynamic Analysis," Small Business Economics, Springer, Springer, vol. 27(2), pages 139-156, October.
  10. Parinduri, Rasyad, 2012. "The effects of owners' family hardship on micro and small firms' growth: an evidence from Indonesia," MPRA Paper 39039, University Library of Munich, Germany.
  11. Chiara Coluzzi & Annalisa Ferrando & Carmen Martínez-Carrascal, 2009. "Financing obstacles and growth: An analysis for euro area non-financial corporations," Banco de Espa�a Working Papers 0836, Banco de Espa�a.
  12. Prof. Dr. Michael Grimm & Simon Lange & Jun-Prof. Dr. Jann Lay, 2012. "Credit-constrained in Risky Activities? The Determinants of the Capital Stocks of Micro and Small Firms in Western Africa," GIGA Working Paper Series 185, GIGA German Institute of Global and Area Studies.
  13. Michael Grimm & Simon Lange & Jann Lay, 2011. "Credit-constrained in risky activities? The determinants of capital stocks of micro and small firms in Western Africa," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 104, Courant Research Centre PEG.
  14. Hessels, Jolanda & Parker, Simon C., 2013. "Constraints, internationalization and growth: A cross-country analysis of European SMEs," Journal of World Business, Elsevier, vol. 48(1), pages 137-148.
  15. Claude Berthomieu & Anastasia Ri, 2009. "Process and Effects of Financial Liberalization in Transition Countries: A Selective Literature Survey," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(4), pages 453-473, December.
  16. Kiss, Andreea N. & Danis, Wade M. & Cavusgil, S. Tamer, 2012. "International entrepreneurship research in emerging economies: A critical review and research agenda," Journal of Business Venturing, Elsevier, vol. 27(2), pages 266-290.
  17. Péter Hernádi & Mihály Ormos, 2012. "What managers think of capital structure and how they act: Evidence from Central and Eastern Europe," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 12(2), pages 47-71, December.
  18. Segarra Blasco, Agustí, 1958- & Teruel, Mercedes, 2010. "Are small firms more sensitive to financial variables?," Working Papers 2072/151623, Universitat Rovira i Virgili, Department of Economics.
  19. Zambaldi, Felipe & Aranha, Francisco & Lopes, Hedibert & Politi, Ricardo, 2011. "Credit granting to small firms: A Brazilian case," Journal of Business Research, Elsevier, vol. 64(3), pages 309-315, March.

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