Equity gap? - Which equity gap? On the financing structure of Germany's Mittelstand

Arbeitspapier

This paper examines the financing structure of small and medium-sized enterprises (SMEs) in Germany and questions whether an equity gap - or, more generally, a financing gap -exists. Reviewing the literature and available data sources, we find that financing constraints seem to affect, if at all, only a very small subgroup among highly growth-oriented firms. We do not detect any structural problems in average SME's capital structure. Rather, German Mittelstand firms appear to be non-growth oriented and content with their financing decisions. While the relationship-based German banking system helps to minimize the risk of credit rationing, trade credit offers an additional, stable form of liquidity insurance. Highly innovative firms with strong growth potential, on the other hand, do seize the opportunity to tap unconventional means of financing (e.g. mezzanine capital) and appear very successful in doing so.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Frankfurt School - Working Paper Series ; No. 106

Classification and Topics

• Classification: Wirtschaft ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
• Subject: Equity gap ; capital structure ; financing gap ; financing structure ; SME

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bannier, Christina E. ; Grote, Michael H.
• Event: Veröffentlichung
• (who): Frankfurt School of Finance & Management
• (where): Frankfurt a. M.
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/27872
• URN: urn:nbn:de:101:1-20081202209
• Last update: 10.03.2025, 11:43 AM CET