Regional financial system and the financial structure of small firms

Arbeitspapier

The capital structure of firms is known to be different not only due to firm characteristics but also to the sources of capital. Therefore, there is a need to understand the supply side effects on a firm´s capital structure. A small firm´s choice of financing sources may be limited by the supply-side financial endowment of the region. Small firms are known to be heavily reliant on internal finance and the quantity and price channels are expected to drive usage of debt. Our findings on 2000 small firms in Eng land show that the quantity and price channels might work only for supply of very local capitals. Firms tend to prefer internal finance when semi-local or national institutions show higher commercial operational distance in their region. These results point out that semi-local and national institutions tend to drive away usage of debt due to monitoring costs or credit rationing, while very local institutions increase the usage of debt through quantity or price channels.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Jena Economic Research Papers ; No. 2009,011

Classification and Topics

• Classification: Wirtschaft ; Investment Banking; Venture Capital; Brokerage; Ratings and Ratings Agencies ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill ; Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
• Subject: Capital structure ; regional financial system ; information asymmetries ; geography ; Kapitalstruktur ; Klein- und Mittelunternehmen ; Finanzierung ; Regionaler Finanzmarkt ; Asymmetrische Information ; England

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Mahagaonkar, Prashanth ; Chaudhuri, Swayan
• Event: Veröffentlichung
• (who): Friedrich Schiller University Jena and Max Planck Institute of Economics
• (where): Jena
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/31722
• Last update: 10.03.2025, 11:43 AM CET