Suitable or non-suitable? : An investigation of Eurozone SME access to market-based finance

Author / Creator

Bongini, Paola, author

Available as

Online

Summary

The present paper provides in-depth analysis of SME access to capital markets among Eurozone countries. First, we detect the factors -- at the firm and country level -- that are able to influence t...

The present paper provides in-depth analysis of SME access to capital markets among Eurozone countries. First, we detect the factors -- at the firm and country level -- that are able to influence the likelihood of SME access to market-based finance. Second, we construct an index of what we call "market suitability", i.e., a score that can be measured at the dimensional, sectoral and national level, which provides the percentage of firms potentially fit for market-based finance. Our results highlight that a few Eurozone countries seem to have deployed the "potential" for capital market financing, while there exists a large percentage of unexploited potential for firms fit for market-based finance. It should also be highlighted that overall business conditions -- measured by GDP growth, the degree of development of domestic financial markets, and the quality of the legal and judicial enforcement system -- greatly influence a firm's market suitability. In the period under consideration (2000-2014), macro factors tended to reduce the likelihood of SME access to market-based finance in most countries in our sample.

Show More