European SMEs’ growth: the role of market-based finance and public financial support

Simone Boccaletti (), Annalisa Ferrando (), Emanuele Rossi () and Monica Rossolini ()
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Simone Boccaletti: University of Milano-Bicocca
Annalisa Ferrando: European Central Bank
Emanuele Rossi: University of Milano-Bicocca
Monica Rossolini: University of Milano-Bicocca

Small Business Economics, 2025, vol. 64, issue 2, No 19, 727 pages

Abstract: Abstract The study investigates the role of market-based finance and public financial support in aiding scaling up by European SMEs. First, we analyse the impact of public loan guarantee schemes on firms’ access to market-based instruments. Second, we study whether firms’ access to market-based finance and the use of public grants boost a firm’s (ex post) growth. The analysis is based on a unique and original dataset of about 31,000 Eurozone firms in the 2009–2020 period. The study finds that firms’ access to market-based finance is (i) driven positively by the previous use of public financial support schemes and (ii) has a positive effect on subsequent growth. In particular, SMEs display relatively higher growth in fixed assets, while for large firms, growth is mainly driven by current assets. Moreover, SME issuers using public grants achieve significantly stronger growth than comparable firms.

Keywords: Access to finance; Public financial support; Market-based finance; SME financing; SME growth (search for similar items in EconPapers)
JEL-codes: D22 G23 G32 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11187-024-00918-y

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