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Financing and obstacles for high growth enterprises: The European case

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  • Ferrando, Annalisa
  • Pal, Rozalia
  • Durante, Elena

Abstract

This paper investigates the links between alternative growth phases of firms and barriers to financing and investment using firm-level information for a representative sample of EU companies. We propose a novel classification of corporates: high growth (HGEs), stable and declining enterprises. We find that during the phase of high growth, firms are on average more financially constrained. To match their needs for external finance, HGEs are more likely to apply for equity financing. Furthermore, we identify firms with high growth potential. Using survey data, we investigate the barriers to investment activities faced by actual and potential HGEs. Our findings suggest that the most stringent obstacles for actual HGEs are the availability of skilled staff and business regulations, while potential HGEs are blocked by uncertainty about the future.

Suggested Citation

  • Ferrando, Annalisa & Pal, Rozalia & Durante, Elena, 2019. "Financing and obstacles for high growth enterprises: The European case," EIB Working Papers 2019/03, European Investment Bank (EIB).
    • Handle: RePEc:zbw:eibwps:201903
    DOI: 10.2867/14742
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    References listed on IDEAS

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    Cited by:

    1. Coad, Alexander & Domnick, Clemens & Flachenecker, Florian & Harasztosi, Peter & Janiri, Mario Lorenzo & Pál, Rozália & Teruel Carrizosa, Mercedes, 2021. "Do capacity constraints trigger high growth for enterprises?," EIB Working Papers 2021/08, European Investment Bank (EIB).
    2. Pablo Moya-Martínez & Raúl Del Pozo-Rubio, 2021. "The financing of SMEs in the Spanish tourism sector at the onset of the 2008 financial crisis: Lessons to learn?," Tourism Economics, , vol. 27(7), pages 1323-1336, November.
    3. Sander Lammers & Massimo Giuliodori & Robert Schmitz & Adam Elbourne, 2023. "Bank Funding, SME lending and Risk Taking," CPB Discussion Paper 447, CPB Netherlands Bureau for Economic Policy Analysis.
    4. Alex Coad & Clemens Domnick & Florian Flachenecker & Peter Harasztosi & Mario Lorenzo Janiri & Rozalia Pal & Mercedes Teruel, 2022. "Capacity constraints as a trigger for high growth," Small Business Economics, Springer, vol. 59(3), pages 893-923, October.
    5. Florian Flachenecker & Martin Kornejew & Mario Lorenzo Janiri, 2021. "The effects of publicly supported environmental innovations on firm growth in the European Union," SEEDS Working Papers 0721, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Jun 2021.
    6. Teruel Carrizosa, Mercedes & Coad, Alexander & Domnick, Clemens & Flachenecker, Florian & Harasztosi, Péter & Janiri, Mario Lorenzo & Pál, Rozália, 2021. "The birth of new high growth enterprises: Internationalisation through new digital technologies," EIB Working Papers 2021/02, European Investment Bank (EIB).
    7. Lalinsky, Tibor & Pál, Rozália, 2021. "Efficiency and effectiveness of the COVID-19 government support: Evidence from firm-level data," EIB Working Papers 2021/06, European Investment Bank (EIB).

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    More about this item

    Keywords

    high growth enterprises; financing conditions; bank financing; equity financing; obstacles to investment;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • G01 - Financial Economics - - General - - - Financial Crises
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • 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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