Financial structure and Southern Italy firms’ growth

Domenico Sarno

QA - Rivista dell'Associazione Rossi-Doria, 2007, issue 2

Abstract: This paper shows that the growth of firms in the Southern Italian (Mezzogiorno) regions is financed mostly by internal sources, since external financing is more problematic and costly. Hence firm growth is subject to financial constraints. The “financial growth cycle” these are used to analyse the features of the capital structure of the Mezzogiorno’s SMEs compared to Italy-wide SMEs. Then, within the framework proposed by financial constraints literature, the capital structure related to the growth is analysed. In order to estimate the growth-cash flow relationship the empirical Gibrat growth model enriched with the cash flow variable is used.

Keywords: Financial Constraints; Firm Growth; Capital Structure (search for similar items in EconPapers)
JEL-codes: L20 G31 G32 (search for similar items in EconPapers)
Date: 2007

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Persistent link: http://EconPapers.repec.org/RePEc:rar:journl:0054

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