Advanced Search
MyIDEAS: Login

Belgian corporate finance in a European perspective

Contents:

Author Info

  • V. Baugnet

    (National Bank of Belgium, Research Department)

  • M.-D. Zachary

    (National Bank of Belgium, Research Department)

Registered author(s):

    Abstract

    When analysing corporate finance, it is necessary to take account of various factors which may cause significant disparities between firms, such as their size and their sector of activity. Taking account of the size aspect, by neutralising sectoral disparities, there are few differences between the debt levels of small, medium-sized and large firms. Conversely, the debt structure appears to depend on the firm’s size : small firms are more dependent on bank loans. That is confirmed by the high degree to which they make use of credit facilities. Nonetheless, surveys indicate that access to finance is not a major constraint for SMEs, be they Belgian or European : they perceive access to finance, and more specifically access to bank finance, as relatively easy. In contrast, the financial structure of firms differs widely between sectors, and depends to a great extent on the associated intrinsic activity and the scale of the investments. Sectors with high investment ratios, such as the transport and communication sector or the energy sector, mainly use long-term finance. Ample equity capital enables them to maintain a balanced financial situation. Conversely, highly labour-intensive sectors, such as construction or trade, display much higher debt-to-equity ratios ; their debts are mainly short term and they make extensive use of trade credit. A more detailed analysis of the manufacturing sector also reveals differences of financial structure between firms which are classed as innovative and those which are not. In particular, if the chemical industry is excluded, the firms in the innovative sectors make less use of bank loans and record more short-term debt than firms in non-innovative sectors. That may reflect the lenders’ desire to limit the risk incurred, particularly by using the threat of non-renewal of the loan to encourage the manager to behave efficiently. The qualitative surveys appear to indicate that the financial constraint is felt more by innovative firms than by SMEs in general. That expresses a financing need specific to innovative SMEs. At the early stages in their development, they depend almost exclusively on the entrepreneur’s personal resources and those of his friends and family, and venture capital only takes over in the later stages. Finally, as regards the financing structure, a comparison between Belgian firms and their European counterparts, after neutralising the specific effects of size and sector, indicates that the former issue larger amounts of capital. Abundant intra-group financial flows and a favourable institutional context are conducive to that situation.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.nbb.be/doc/oc/repec/ecrart/ecorevII2007E_H4.pdf
    Download Restriction: no

    Bibliographic Info

    Article provided by National Bank of Belgium in its journal Economic Review.

    Volume (Year): (2007)
    Issue (Month): II (September)
    Pages: 63-80

    as in new window
    Handle: RePEc:nbb:ecrart:y:2007:m:september:i:ii:p:63-80

    Contact details of provider:
    Postal: Boulevard de Berlaimont 14, B-1000 Bruxelles
    Phone: (+ 32) (0) 2 221 25 34
    Fax: (+ 32) (0) 2 221 31 62
    Email:
    Web page: http://www.nbb.be/
    More information through EDIRC

    Related research

    Keywords: bank lending; venture capital; corporate finance.;

    Find related papers by JEL classification:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:nbb:ecrart:y:2007:m:september:i:ii:p:63-80. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.