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Bridging the finance gap for small firms. The role of information flows across large firm-based production networks in supplying finance to small firms: the case of France

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  • Hancké, Bob
  • Cieply, Sylvie

Abstract

This paper discusses finance problems of small firms. Since small firms and banks belong to different economic worlds, as a result of which information assymetries emerge, credit rationing leads to sub-optimal financing arrangements. The paper analyses institutional solutions to these information assymetries between banks andsmall firms and argues that, as a result of the political-economic development ofFrance since the Second World War, production networks around large firms have become the institutional solution for the finance problems of small firms. These intricate links allow for multi-layered information, which can be meaningfully understood by both, to flow smoothly between large and small firms. The paper concludes by raising the relevance of this particular solution for similar problems in other countries.

Suggested Citation

  • Hancké, Bob & Cieply, Sylvie, 1996. "Bridging the finance gap for small firms. The role of information flows across large firm-based production networks in supplying finance to small firms: the case of France," Discussion Papers, Research Unit: Economic Change and Employment FS I 96-311, WZB Berlin Social Science Center.
    • Handle: RePEc:zbw:wzbece:fsi96311
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    Cited by:

    1. Hancké, Bob, 1997. "Modernisation without flexible specialisation: how large firm restructuring and government regional policies became the step-parents of autarchic regional production systems in France," Discussion Papers, Research Unit: Economic Change and Employment FS I 97-304, WZB Berlin Social Science Center.
    2. Hackethal Andreas, 2001. "How Unique are US-Banks?. The Role of Banks in Five Major Financial Systems / Wie „einzigartig“ sind US-Banken?. Die Bedeutung von Banken in fünf Finanzsystemen," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 221(5-6), pages 592-619, October.
    3. SylvieCieply & Bernard Paranque & ., 1997. "French manufacturing firms and the capital gap since1985 - a credit rationing approach," Finance 9708002, University Library of Munich, Germany, revised 29 Oct 2000.

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