Are finance constraints hindering the growth of SMEs in Europe?
AbstractThis paper examines whether small and mediumsized enterprises (SMEs) in Europe suffer from a structural financing problem that hinders their growth. To this end, we estimate growth-cashflow sensitivities for firms in different size classes. Our results show that the sensitivity of company growth to cashflow rises as company size falls, which suggests that SMEs indeed encountered finance constraints that prevented them from fully exploiting their growth potential during the sample period 1996-2000. However, within each size class, quoted firms - even when small - tend to suffer less from finance constraints than unquoted firms.
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Bibliographic InfoPaper provided by European Investment Bank, Economics Department in its series EIB Papers with number 7/2003.
Length: 29 pages
Date of creation: 09 Jun 2003
Date of revision:
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SMEs; Structural financing; Growth-cashflow sensitivities; Financial constraints; growth potential;
Find related papers by JEL classification:
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
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