Spatial variations in financial constraints of SMEs—evidence from firm-level estimates of investment-cash flow sensitivities in Sweden

Martin Andersson, Johan E. Eklund () and Alexandra Tsvetkova
Additional contact information
Johan E. Eklund: Blekinge Institute of Technology

Small Business Economics, 2023, vol. 60, issue 4, No 17, 1683-1698

Abstract: Abstract It is well established that there is uneven availability of credit across space, in particular for SMEs. The evidence on whether this translates into differences in actual business investments remains scarce. We assess this question by using firm-level data for Swedish firms and estimate the extent to which the average investment-cash flow sensitivities of firms vary across the urban–rural hierarchy. We find that the world of financing is not yet flat for the majority of Swedish SMEs. Companies located in non-metro regions are most dependent on own cash flow in their investments. The results hold for all firms, firms of different sizes, firms operating in low-end services, unaffiliated firms and those belonging to domestic corporations. In contrast, investment-cash flow sensitivity of firms operating in high-tech services and those belonging to a multinational enterprise does not differ geographically. On average, regional investment-cash flow sensitivity is lower in bigger, denser and more educated local labour market regions; it is higher in regions with greater concentration of SMEs.

Keywords: Sweden; SMEs; Financial constraints; Urban–rural continuum; Access to finance; Investment decisions; O18; R10; R51; D25 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11187-022-00673-y Abstract (text/html)
Access to full text is restricted to subscribers.

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:kap:sbusec:v:60:y:2023:i:4:d:10.1007_s11187-022-00673-y

Ordering information: This journal article can be ordered from
http://www.springer. ... 29/journal/11187/PS2

DOI: 10.1007/s11187-022-00673-y

Access Statistics for this article

Small Business Economics is currently edited by Zoltan J. Acs and David B. Audretsch

More articles in Small Business Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().