Determinants of Debt Financing Behavior of Unlisted Moroccan Family SMEs: A Panel Data Analysis

Zouhair Boumlik (), Badia Oulhadj and Olivier Colot
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Zouhair Boumlik: Research Laboratory in Strategy and Management of Organizations, National School of Business and Management, Hassan First University of Settat, Settat 26000, Morocco
Badia Oulhadj: Research Laboratory in Strategy and Management of Organizations, National School of Business and Management, Hassan First University of Settat, Settat 26000, Morocco
Olivier Colot: Department of Accounting, Auditing, Risk Management, and Entrepreneurship, Warocqué School of Business and Economics, University of Mons, 7000 Mons, Belgium

IJFS, 2025, vol. 13, issue 1, 1-31

Abstract: This paper investigates the firm-level determinants of debt policy in private family SMEs. It employs a comparative analysis of two sub-samples of family and non-family SMEs using panel data from 200 Moroccan SMEs over the period from 2018 to 2022. The findings reveal that family SMEs adopt a conservative financing strategy, maintaining lower debt levels compared to their non-family counterparts. This conservative approach appears to be driven by risk considerations related to bankruptcy costs associated with higher debt levels. Indeed, the results show that the financing behaviors of family SMEs align more closely with pecking order theory than trade-off theory. Furthermore, the study suggests that the financing behavior of family SMEs differs slightly from that of non-family SMEs, but this difference is not resistant to changes in debt measures. This study makes several contributions to the literature. First, it identifies the key determinants of debt policy among family SMEs, offering insights into the distinctive financing strategies employed by these firms. Second, it offers evidence supporting the relevance of capital structure theories in explaining the financing decisions of family firms within the context of developing economies. In addition, the study’s findings have practical implications insofar as they can guide policymakers and banking stakeholders, especially those in bank-based economies where debt is the primary financing option for SMEs, in conceiving adapted financing options that align with the characteristics of family firms, thereby fostering their growth and, consequently, the economy’s development.

Keywords: debt financing; family SMEs; panel data; Morocco (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2025
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