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Capital Structure across Italian Regions: The Role of Financial and Economic Differences

Author

Listed:
  • Filippo di Pietro

    (Departamento de Economía Financiera y Dirección de Operaciones, Universidad de Sevilla, 41018 Sevilla, Spain)

  • Maria Elena Bontempi

    (Department of Economics, Alma Mater Studiorum Università di Bologna, 40125 Bologna, Italy)

  • María-José Palacín-Sánchez

    (Departamento de Economía Financiera y Dirección de Operaciones, Universidad de Sevilla, 41018 Sevilla, Spain)

  • Reyes Samaniego-Medina

    (Department of Financial Economics and Accounting, Universidad Pablo de Olavide, 41013 Seville, Spain)

Abstract

The objective of this article is to analyse how regional financial and economic differences influence the capital structure decisions of small and medium-sized enterprises (SMEs). Specifically, this paper considers the regional financial and economic differences in four ways: the development of the financial sector in the region, bank market concentration, the financial cost of obtaining funds, and regional economic development. For this purpose, we used unbalanced panel data from 26,504 SMEs across the 20 Italian regions and over the period from 2004 to 2010. This work is completed with an analysis of a no-crisis (2004–2007) and a crisis period (2008–2010). The results show that the regional differences in the degree of financial sector development, banking concentration, and local economic situations have a significant impact on the leverage level of SMEs, while the cost of obtaining funds is only relevant during a period of economic stability. These results suggest that insights can be derived from data disaggregation at the regional level inside the same country. These regional divergences in the capital structure of SMEs could influence regional economic resilience.

Suggested Citation

  • Filippo di Pietro & Maria Elena Bontempi & María-José Palacín-Sánchez & Reyes Samaniego-Medina, 2019. "Capital Structure across Italian Regions: The Role of Financial and Economic Differences," Sustainability, MDPI, vol. 11(16), pages 1-14, August.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:16:p:4474-:d:258750
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    References listed on IDEAS

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    2. David Yechiam Aharon & Yossi Yagil, 2019. "The Impact of Financial Leverage on Shareholders’ Systematic Risk," Sustainability, MDPI, vol. 11(23), pages 1-23, November.
    3. Huseyin OZTURK & YASUDA Yukihiro, 2021. "We Are Alike: Capital Structure of Japanese SMEs Across Prefectures," Discussion papers 21092, Research Institute of Economy, Trade and Industry (RIETI).
    4. Matías Mayor & Raul Ramos, 2020. "Regions and Economic Resilience: New Perspectives," Sustainability, MDPI, vol. 12(11), pages 1-4, June.
    5. Olivier Butzbach & Domenico Sarno, 2019. "To What Extent Do Regional Effects Influence Firms’ Capital Structure? The Case of Southern Italian SMEs’," IJFS, MDPI, vol. 7(1), pages 1-20, January.

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