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Small business finance in Italy

  • Guiso, Luigi

    ()

    (University of Sassari)

Using survey data on Italian manufacturing firms, this paper examines firms' capital structure and their access to financial debt, notably bank loans. We find that the share of financial debt in total liabilities is, on average, smaller for small firms than for large ones. However, this is not because the typical small firm borrows less than a large firm, but because small firms are more likely not to borrow at all. For firms that do borrow, the share of financial debt varies little with firm size. The absence of financial debt on the balance sheet of many firms is mainly because they do not want to borrow, not because lenders do not want to lend. Thus, credit rationing does not appear to be a widespread phenomenon, but when it happens, lack of size and equity seems to play a key role.

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Paper provided by European Investment Bank, Economics Department in its series EIB Papers with number 10/2003.

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Length: 30 pages
Date of creation: 09 Jun 2003
Date of revision:
Handle: RePEc:ris:eibpap:2003_010
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  1. Krishna B. Kumar & Raghuram G. Rajan & Luigi Zingales, 1999. "What Determines Firm Size?," NBER Working Papers 7208, National Bureau of Economic Research, Inc.
  2. Mitchell A. Petersen & Raghuram G. Rajan, 2000. "Does Distance Still Matter? The Information Revolution in Small Business Lending," NBER Working Papers 7685, National Bureau of Economic Research, Inc.
  3. Hart, Oliver & Moore, John, 1994. "A Theory of Debt Based on the Inalienability of Human Capital," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 841-79, November.
  4. Mark Gertler & Simon Gilchrist, 1991. "Monetary Policy, Business Cycles and the Behavior of Small Manufacturing Firms," NBER Working Papers 3892, National Bureau of Economic Research, Inc.
  5. Guiso, L. & Parigi, G., 1996. "Investment and Demand Uncertainty," Papers 289, Banca Italia - Servizio di Studi.
  6. Stewart C. Myers & Raghuram G. Rajan, 1998. "The Paradox Of Liquidity," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 733-771, August.
  7. Hoshi, Takeo & Kashyap, Anil & Scharfstein, David, 1991. "Corporate Structure, Liquidity, and Investment: Evidence from Japanese Industrial Groups," The Quarterly Journal of Economics, MIT Press, vol. 106(1), pages 33-60, February.
  8. Lerner, Josh, 1995. " Venture Capitalists and the Oversight of Private Firms," Journal of Finance, American Finance Association, vol. 50(1), pages 301-18, March.
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