Belgian corporate finance in a European perspective
When analysing corporate finance, it is necessary to take account of various factors which may cause significant disparities between firms, such as their size and their sector of activity. Taking account of the size aspect, by neutralising sectoral disparities, there are few differences between the debt levels of small, medium-sized and large firms. Conversely, the debt structure appears to depend on the firm’s size : small firms are more dependent on bank loans. That is confirmed by the high degree to which they make use of credit facilities. Nonetheless, surveys indicate that access to finance is not a major constraint for SMEs, be they Belgian or European : they perceive access to finance, and more specifically access to bank finance, as relatively easy. In contrast, the financial structure of firms differs widely between sectors, and depends to a great extent on the associated intrinsic activity and the scale of the investments. Sectors with high investment ratios, such as the transport and communication sector or the energy sector, mainly use long-term finance. Ample equity capital enables them to maintain a balanced financial situation. Conversely, highly labour-intensive sectors, such as construction or trade, display much higher debt-to-equity ratios ; their debts are mainly short term and they make extensive use of trade credit. A more detailed analysis of the manufacturing sector also reveals differences of financial structure between firms which are classed as innovative and those which are not. In particular, if the chemical industry is excluded, the firms in the innovative sectors make less use of bank loans and record more short-term debt than firms in non-innovative sectors. That may reflect the lenders’ desire to limit the risk incurred, particularly by using the threat of non-renewal of the loan to encourage the manager to behave efficiently. The qualitative surveys appear to indicate that the financial constraint is felt more by innovative firms than by SMEs in general. That expresses a financing need specific to innovative SMEs. At the early stages in their development, they depend almost exclusively on the entrepreneur’s personal resources and those of his friends and family, and venture capital only takes over in the later stages. Finally, as regards the financing structure, a comparison between Belgian firms and their European counterparts, after neutralising the specific effects of size and sector, indicates that the former issue larger amounts of capital. Abundant intra-group financial flows and a favourable institutional context are conducive to that situation.
Volume (Year): (2007)
Issue (Month): ii (September)
|Contact details of provider:|| Postal: Boulevard de Berlaimont 14, B-1000 Bruxelles|
Phone: (+ 32) (0) 2 221 25 34
Fax: (+ 32) (0) 2 221 31 62
Web page: https://www.nbb.be/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- N. Berger, Allen & F. Udell, Gregory, 1998.
"The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle,"
Journal of Banking & Finance,
Elsevier, vol. 22(6-8), pages 613-673, August.
- Allen N. Berger & Gregory F. Udell, 1998. "The economics of small business finance: the roles of private equity and debt markets in the financial growth cycle," Finance and Economics Discussion Series 1998-15, Board of Governors of the Federal Reserve System (U.S.).
- Catherine Rigo, 2001. "Le financement des entreprises par capital-risque," Working Paper Document 13, National Bank of Belgium.
- K. Baeyens & S. Manigart, 2006. "Follow-on financing of venture capital backed companies: The choice between debt, equity, existing and new investors," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 06/362, Ghent University, Faculty of Economics and Business Administration.
- Baeyens,K. & Manigart,S., 2006. "Follow-on financing of venture capital backed companies: the choice between debt, equity, existing and new investors," Vlerick Leuven Gent Management School Working Paper Series 2006-05, Vlerick Leuven Gent Management School.
- Rigo, C., 2001. "Le financement des entreprises par capital-risque," Papers 13, Warwick - Development Economics Research Centre. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:nbb:ecrart:y:2007:m:september:i:ii:p:63-80. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.