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Traditional Vs Modern Financing Techniques For Smes - A Global Perspective

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  • Laura Vasilescu

    (University of Craiova Faculty of Economics and Business Administration)

Abstract

In all stages of life cycle for the Small and Medium Enterprises (SMEs) - creation, survival and growth - it is necessary the access to financing sources. Even the bank financing almost recovered after the international financial crisis, the SMES still have to face structural challenges and market failures, information asymmetries, high transaction costs, lack of financial skills and training of small business owners. Beside the traditional forms of financing (credit loans, overdrafts, credit lines) there is a need of new and modern financing tools for SMEs in order to cover a wide range of financing needs, to increase the SMEs flexibility and adaptation to challenging situation on financial markets. Therefore, the alternative financing instruments - asset-based finance, alternative debt, equity instruments and hybrid instruments - could offer new opportunities for the SME financing needs. In this paper are presented the main characteristics of the alternative financing instrument in comparision with the traditional financing techniques, the main barriers faced by small and medium firms in accesing the financing sources and the recend measures adopted by the governments to improve the access to finance for SMEs.

Suggested Citation

  • Laura Vasilescu, 2018. "Traditional Vs Modern Financing Techniques For Smes - A Global Perspective," Annals of University of Craiova - Economic Sciences Series, University of Craiova, Faculty of Economics and Business Administration, vol. 1(46), pages 90-96, November.
    • Handle: RePEc:aio:aucsse:v:1:y:2018:i:46:p:90-96
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    References listed on IDEAS

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    1. Berger, Allen N. & Black, Lamont K., 2011. "Bank size, lending technologies, and small business finance," Journal of Banking & Finance, Elsevier, vol. 35(3), pages 724-735, March.
    2. Beck, T.H.L., 2007. "Financing constraints of SMEs in developing countries : Evidence, determinants and solutions," Other publications TiSEM 85aac075-08b5-44ce-bf1a-9, Tilburg University, School of Economics and Management.
    3. Berger, Allen N. & Udell, Gregory F., 2006. "A more complete conceptual framework for SME finance," Journal of Banking & Finance, Elsevier, vol. 30(11), pages 2945-2966, November.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    traditional financing; alternative financing; factors; trends;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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