The dynamic adjustment towards target capital structures of firms in transition economies*

Haas, Ralph De; Peeters, Marga

doi:10.1111/j.1468-0351.2006.00237.x

Cited by 124 publications

(154 citation statements)

References 74 publications

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“…As a consequence, financial markets were underdeveloped, the banking system was inefficient and mostly state-owned (Aidis 2005;Haas and Peeters 2006;Klapper et al 2002). For firms, it was difficult to attract external finance and they often relied on internal financing and loans from related parties like family and friends (Aidis 2005;Haas and Peeters 2006;Hutchinson and Xavier 2006). In line with these results, the cluster analysis reveals that SMEs in former socialist countries more often tend to be internally-financed SMEs.…”

Section: Country-specific Characteristicssupporting

confidence: 71%

“…State-owned firms and banks, corruption and low levels of investor protection characterised many former socialist countries until the 1990s (Nivorozhkin 2005). As a consequence, financial markets were underdeveloped, the banking system was inefficient and mostly state-owned (Aidis 2005;Haas and Peeters 2006;Klapper et al 2002). For firms, it was difficult to attract external finance and they often relied on internal financing and loans from related parties like family and friends (Aidis 2005;Haas and Peeters 2006;Hutchinson and Xavier 2006).…”

Section: Country-specific Characteristicsmentioning

confidence: 99%

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Financing patterns of European SMEs – an empirical taxonomy

2016

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PrefaceSmall and medium-sized enterprises (SMEs) are often called the backbone of the European economy, contributing to job creation and economic growth. In 2013, more than 21.5m of SMEs in the European Union made for more than 99% of all non-financial enterprises, employed almost 89m people (67% of total employment), and generated 58% of total added value. However, access to finance is more difficult for SMEs than for larger enterprises, not only during the current financial and economic crisis, but also on a permanent structural basis, due to market imperfections in SME financing (see Kraemer-Eis, Lang and Gvetadze, 2015, for more details).The European Investment Fund (EIF) supports Europe's SMEs by improving their access to finance through a wide range of selected financial intermediaries. To this end, the EIF primarily designs, promotes and implements equity and debt financial instruments which specifically target SMEs. In this role, the EIF fosters EU objectives in support of entrepreneurship, growth, innovation, research and development, and employment.EIF's Research & Market Analysis team has established a research cooperation with the Chair of Management at the University of Trier. This EIF Working Paper is one result of the successful cooperation. A follow-on project, building on the findings of the presented analysis and financially supported by the EIB Institute under the Knowledge Programme, is scheduled to start soon.Even though research in SME financing has strongly increased over the recent years, the financing patterns of SMEs in Europe are still not well analysed. Previous empirical studies have shown that firm-, product-, industry-, and country-specific factors influence the financing of SMEs. However, there are only few studies with a holistic perspective taking into account the interrelationships between different financing instruments and their determinants.The research, presented in this EIF Working Paper, provides an integrative perspective of SME financing patterns by identifying and analysing in detail the use of various financing instruments by SMEs. The findings can support the design and development of SME financing instruments across Europe.We thank the researchers for their important work and the very good cooperation with the EIF. We also thank the participants of a seminar with the researchers, which took place at EIF, as well as the participants of a workshop that took place at the European Central Bank, for fruitful discussions. This EIF Working Paper takes a holistic approach to investigate SME financing patterns in Europe by performing a cluster analysis including 12,726 SMEs in 28 European countries. The results reveal that SME financing in Europe is not homogenous but that different financing patterns exist. The cluster analysis identifies six distinct SME financing types: mixed-financed SMEs, statesubsidised SMEs, debt-financed SMEs, flexible-debt-financed SMEs, trade-financed SMEs and internally-financed SMEs. These SME financing types differ according to the number of fin...

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Section: Country-specific Characteristicssupporting

confidence: 71%

Section: Country-specific Characteristicsmentioning

confidence: 99%

Financing patterns of European SMEs – an empirical taxonomy

2016

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“…Also, profitable firms with internal sources of finance will prefer to use these and demand less credit, since the external finance cost is relatively high [11]. Thus, less profitable firms will use more bank debt, since they lack internal funding.…”

Section: Theoretical and Empirical Approaches To The Relationship Betmentioning

confidence: 99%

Influences of the Capital Structure and the Cost of Capital on Financial Performance. Case Study on ENGIE Group

Ivascu¹,

Bărbuță-Mișu²

2017

Risk in Contemporary Economy

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“…Studies have also been undertaken in developing and transitional economies more recently. For example, in a study of developing countries (Booth et al, 2001), of Central and Eastern European economies (de Haas & Peeters, 2006), a study of the effect of political patronage in Malaysia (Fraser, Zhang, & Derashid, 2006), a study of capital structure in Pakistan (Hijazi & Tariq, 2006), and the influence of the chaebol in South Korea (Kim, Heshmati, & Aoun, 2006). There have also been a few studies focusing on various issues of the capital structure of listed firms in China (Huang & Song, 2006;Tong & Green, 2005;Zhang, Zhang, & Zhao, 2002).…”

Section: Introductionmentioning

confidence: 99%

Leverage, Profitability and the Ownership Structures of Listed Firms in China

Hovey

2007

SSRN Journal

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The relationship between leverage, profitability and a firm's ownership structure in China is investigated in this paper. It is an exploratory study based on all firms listed on the Shanghai and Shenzhen stock exchanges from 1999 to 2005. The results of the empirical analysis are reported in this paper.The most significant result is that foreign holdings are found to have a significant relationship with the leverage of listed firms in China. Whereas, somewhat unexpectedly, institutional ownership, through legal person holding companies, state ownership and private holdings are not found to have a significant relationship with the capital structure choices of firms in China. The results also suggest that some firm-specific factors that are relevant for explaining firm leverage generally referred to in studies in developed economies, such as profitability, growth opportunities, size and tax shields, are also relevant in China. The age of the firms and the industry t o which they principally belong also has significant bearing. Yet direct government grants and the use of an internationally renowned auditing firm do not show a significant relationship.

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The dynamic adjustment towards target capital structures of firms in transition economies*

Cited by 124 publications

References 74 publications

Financing patterns of European SMEs – an empirical taxonomy

Financing patterns of European SMEs – an empirical taxonomy

Influences of the Capital Structure and the Cost of Capital on Financial Performance. Case Study on ENGIE Group

Leverage, Profitability and the Ownership Structures of Listed Firms in China

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