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

  • John Hutchinson

    ()

  • Ana Xavier

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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File URL: http://hdl.handle.net/10.1007/s11187-005-4412-3
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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
DOI: 10.1007/s11187-005-4412-3
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  1. Gérard Roland, 2000. "Transition and Economics: Politics, Markets, and Firms," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262182033, March.
  2. Marko Simoneti & Joze P. Damijan & Matija Rojec & Boris Majcen, 2004. "Case-by-case versus Mass Privatization in Transition Economies: Owner and Seller Effects on Performance of Firms in Slovenia," LICOS Discussion Papers 14304, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
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  15. Robert E. Carpenter & Bruce C. Petersen, 2002. "Is The Growth Of Small Firms Constrained By Internal Finance?," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 298-309, May.
  16. Jozef Konings & Marian Rizov & Hylke Vandenbussche, 2002. "Investment and Credit Constraints in Transition Economies: Micro Evidence from Poland, the Czech Republic, Bulgaria and Romania," LICOS Discussion Papers 11202, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
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