Are firms in "backward" areas of developed regions more financially constrained? The case of Italian SMEs

Cristiana Donati and Domenico Sarno

Industrial and Corporate Change, 2015, vol. 24, issue 6, 1353-1375

Abstract: Based on GMM-system estimates of a large panel data set of Italian small- and medium-sized firms (SMEs) observed in the years 2001–2008, the analysis confirms that the growth of smaller firms is more dependent on internal resources than that of larger firms. In this regard, we adopt the standard model used to test the law of proportionate effect, augmented by the cash flow variable, to examine both the growth profile of Italian SMEs and the growth-cash flow nexus. We also show that for the SMEs in the Southern "backward" regions of Italy, the dependence of firm growth on inside finance is more intense than for firms operating in the more developed regions of the country. We conclude remarking that the tightness of the financial arrangement allows a downgraded size distribution, as the right-skewed firm size distribution of the Southern SMEs seems to suggest.

Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1093/icc/dtu030 (application/pdf)
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:oup:indcch:v:24:y:2015:i:6:p:1353-1375.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Industrial and Corporate Change is currently edited by Josef Chytry

More articles in Industrial and Corporate Change from Oxford University Press and the Associazione ICC Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().