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European SMEs’ growth: the role of market-based finance and public financial support

Author

Listed:
  • Simone Boccaletti

    (University of Milano-Bicocca)

  • Annalisa Ferrando

    (European Central Bank)

  • Emanuele Rossi

    (University of Milano-Bicocca)

  • Monica Rossolini

    (University of Milano-Bicocca)

Abstract

The study investigates the role of market-based finance and public financial support in aiding scaling up by European SMEs. First, we analyse the impact of public loan guarantee schemes on firms’ access to market-based instruments. Second, we study whether firms’ access to market-based finance and the use of public grants boost a firm’s (ex post) growth. The analysis is based on a unique and original dataset of about 31,000 Eurozone firms in the 2009–2020 period. The study finds that firms’ access to market-based finance is (i) driven positively by the previous use of public financial support schemes and (ii) has a positive effect on subsequent growth. In particular, SMEs display relatively higher growth in fixed assets, while for large firms, growth is mainly driven by current assets. Moreover, SME issuers using public grants achieve significantly stronger growth than comparable firms.

Suggested Citation

  • Simone Boccaletti & Annalisa Ferrando & Emanuele Rossi & Monica Rossolini, 2025. "European SMEs’ growth: the role of market-based finance and public financial support," Small Business Economics, Springer, vol. 64(2), pages 691-727, February.
    • Handle: RePEc:kap:sbusec:v:64:y:2025:i:2:d:10.1007_s11187-024-00918-y
    DOI: 10.1007/s11187-024-00918-y
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    More about this item

    Keywords

    Access to finance; Public financial support; Market-based finance; SME financing; SME growth;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • 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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