Firms' Financing Constraints: Do Perceptions Match the Actual Situation?

Ferrando, Annalisa; Mulier, Klaas

doi:10.2139/ssrn.2305940

Cited by 17 publications

(30 citation statements)

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“…investment) loan was denied at least once per year(loan application denied); (b) the firm received less than 75% of the quarterly loan amount it requested at least once per year (rationed); (c) the firm refused the quarterly loan offer because the rate was too high at least once per year (refused due to high cost). Alternatively, the firm is considered as not cash or investment credit-constrained whether its quarterly loan applications were totally approved or at least if the firm obtain more than 75% of the loans amounts it requested over the year (Ferrando and Mulier, 2015).…”

Section: Literature Reviewmentioning

confidence: 99%

Effect of Short-term Financial Constraints on SMEs, Investment Decisions

Eskandar

Hadadi

2022

IJFIFSA

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Financial constraints are one of the influencing factors on investment decisions. Financial constraints put firms under pressure to forgo investment opportunities to finance their working capital needs. Moreover, some variables like working capital needs and liquidity of a firm are likely to affect the relationship between these two variables. Hence, this study seeks to examine the effect of short-term credit constraints on the investment of small and medium-sized enterprises (SMEs), firms with different characteristics in comparison with large-sized firms. In addition, this correlation is tested by considering the effect of mentioned moderating variables (working capital and liquidity). The sample of this study includes the firms listed in Tehran Stock Exchange from 2011 to 2018, which are considered as SMEs based on some criteria. Multivariate regression models and E-views software are used to test the research hypotheses. The results indicated that short-term credit constraints negatively affect corporate investment. It means that constrained firms invest in fewer investment opportunities because of facing source shortages.121 Effect of Short-term Financial Constraints on SMEs, Investment…Moreover, in companies requiring more working capital, the inverse effect of short-term credit constraints on corporate investment is stronger. Such firms suffer from financial problems and are not able to use their investment opportunities. Additionally, this hypothesis that companies with high liquidity can offset u effects of short-term financial constraints on fixed investment, is not confirmed.

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Section: Literature Reviewmentioning

confidence: 99%

Effect of Short-term Financial Constraints on SMEs, Investment Decisions

Eskandar

Hadadi

2022

IJFIFSA

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“…During the period of the financial crisis and its spill over effects over the economies, SMEs seem to suffer extremely by deteriorating external financing conditions (Ferrando et al, 2016; Artola & Genre, 2011; Ferrando & Mulier, 2015; Terceño, Martinez, & Sorrosal‐Forradellas, 2013). Investor confidence diminished dramatically in the banking sector of the economies more affected by the financial crisis, such as Greece, Ireland, Italy, Portugal and Spain, given that their banks tended to assign large percentages of their portfolios to the debt securities issued by domestic sovereigns (Ferrando et al, 2017).…”

Section: Contextualizing Smes' Access To Financementioning

confidence: 99%

“…Depending on the results, several papers analyse whether the impact of the crisis was homogeneous in countries with differences in development, growth, strength of the financial system, regulations, etc. On the other hand, other papers analyse whether the consequences of the crisis were channelled through a decrease in the supply of bank financing (Ferrando et al, 2017; Öztürk & Mrkaic, 2014), due to the impact on the banks' balance sheets (Wehinger, 2014), the appearance of alternative financing and the increase in the costs of traditional financing (Casey & O'Toole, 2014), or it was channelled by a decrease in the demand for financing, given by a more conservative behaviour of the companies (Holton et al, 2014), or if it was only a perception of the increase of the limitations that was not corroborated really (Ferrando & Mulier, 2015).…”

Section: What Has Been Done With Safe Survey?mentioning

confidence: 99%

“…Regarding to the relationship between the characteristics of enterprises and access to external financing, most of the papers find a positive relationship between size, age and ownership on access to financing (Ferrando & Griesshaber, 2011; Ferrando & Mulier, 2015; García‐Posada, 2019; Holton et al, 2014; Mac an Bhaird et al, 2016; Öztürk & Mrkaic, 2014).…”

Section: What Has Been Done With Safe Survey?mentioning

confidence: 99%

“…These firms present many different problems such as obstacles to access to external financing. The financial situation and the access to external finance of firms are essential for the investment and the development of an economy (Ferrando & Mulier, 2015; Ferrando, Popov, & Udel, 2017).…”

Section: Introductionmentioning

confidence: 99%

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A meta‐analysis of SMEs literature based on the survey on access to finance of enterprises of the European central bank

2020

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Small and Medium Enterprises (SMEs) are substantial contributors to employment and to the GDP growth in many countries. Therefore, understanding their difficulties to find appropriate financial resources are a key task for policy makers. Despite being a long-debated topic, there are still several gaps in the literature, probably due to the lack of empirical data. A relatively new database, the Survey of Access to Finance of Enterprises (SAFE) emerged after the subprime crisis. It is regularly conducted by the European Central Bank and can provide new information on SMEs financing. This paper conducts a metaanalysis of the literature based upon this survey, identifying key working hypothesis, methodologies and results.

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Determinants of financing constraints

Santos

Cincera

2021

Small Bus Econ

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Using a recursive bivariate probit model and survey data covering the period 2014–2018, the present paper aims to assess which factors in the financial market (supply side) have a higher impact on firms’ likelihood to be financially constrained. The results show that after controlling for potential endogenous bias due to unobservable firm characteristics, being an innovative firm increases the probability of being financially constrained between 21 and 32%. The nature of the innovation strategy also seems to influence the severity of financing constraints. For financially constrained firms, the main factors that limit future financing for growth ambitions are the lack of collateral, bureaucracy, and too high a price. Findings also indicate that measures to facilitate equity investments and making existing public measures easier are the most important factors for future financing while tax incentives only play a minor role.

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Firms' Financing Constraints: Do Perceptions Match the Actual Situation?

Cited by 17 publications

References 0 publications

Effect of Short-term Financial Constraints on SMEs, Investment Decisions

Effect of Short-term Financial Constraints on SMEs, Investment Decisions

A meta‐analysis of SMEs literature based on the survey on access to finance of enterprises of the European central bank

Determinants of financing constraints

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