On the Dynamics of Small and Medium-Sized Enterprises: Evidence from Japan

Kazuo Yamada (), Izidin El Kalak and Hidenori Takahashi
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Izidin El Kalak: Asian Development Bank Institute
Hidenori Takahashi: Asian Development Bank Institute

No 819, ADBI Working Papers from Asian Development Bank Institute

Abstract: We examine how changes in macroeconomic conditions (the global financial crisis) relate to investment and financial decision making for each of the different size categories of small and medium-sized enterprises (SMEs). We use a large dataset of 764,963 observations in Japan for the time period from 2006 to 2014 to understand the heterogeneity of SMEs in financing and investment decision making, such in size, industry, and region. Our findings are of particular importance for regulators because we show that SMEs are dynamic in nature where they change their financial behavior in response to any macroeconomic shock. In addition, we report differences among the different size subsample at the sales growth and state/industry GDP growth levels. Hence, this requires designing a unique set of regulations for each group accordingly to effectively enhance the growth potential for each group and for SMEs as a whole. These findings have implications for lenders, especially banks, which should treat each size group within SMEs differently while lending or assessing creditworthiness.

Keywords: SMEs; size categories; macro-economic shocks; investment; financing policy; Japan (search for similar items in EconPapers)
JEL-codes: G28 G32 G38 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2018-03-09
New Economics Papers: this item is included in nep-cfn, nep-ent and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:adbiwp:0819

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