Countries lending infrastructure and capital structure determination: The case of European SMEs

Andrea Mc Namara, Pierluigi Murro and Sheila O'Donohoe

Journal of Corporate Finance, 2017, vol. 43, issue C, 122-138

Abstract: We test in a European context the impact of countries' lending infrastructure on SMEs (small and medium sized enterprises) capital structure. Devised from Berger and Udell (2006), this infrastructure is comprised of the information, legal, judicial, bankruptcy, social, tax and regulatory environments. We find that SME debt is higher in countries with more efficient bankruptcy environments in terms of debt recovery and in countries with less stringent regulatory environments by way of lower capital regulatory requirements for banks. Components of the lending infrastructure are found to differ with debt maturity. Long-term debt is synonymous with efficient bankruptcy environments, whilst the information and legal environments matter more for short-term debt. The regulatory environment is important for both long-term and short-term debt. Our results also lend support for the Pecking-Order, Trade-Off and Agency theories of capital structure.

Keywords: SMEs; Capital structure; Lending infrastructure (search for similar items in EconPapers)
JEL-codes: G14 G20 G31 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (39)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S092911991630253X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:43:y:2017:i:c:p:122-138

DOI: 10.1016/j.jcorpfin.2016.12.008

Access Statistics for this article

Journal of Corporate Finance is currently edited by A. Poulsen and J. Netter

More articles in Journal of Corporate Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().