The Role of the Banker in Financing Medium-sized Firms in Belgium: Lender or Adviser?

Robert Wtterwulghe and Frank Janssen
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Robert Wtterwulghe: European Centre for Small and Medium Enterprises at the Catholic University of Louvain, Belgium
Frank Janssen: European Centre for Small and Medium Enterprises at the Catholic University of Louvain, Belgium

Journal of Entrepreneurship and Innovation in Emerging Economies, 1997, vol. 6, issue 1, 75-85

Abstract: This article analyses, on the basis of a field study, the role of banks in financing medium enterprises in Belgium. It shows that, like small firms, medium-sized businesses have a preference for self-financing. As far as external funding is concerned, debt is generally their main source. How ever, their low debt ratios indicate that, as compared to the large firms, these enterprises take less recourse to banks and, as a result, pay little attention to their financial function. The banker does not play an important role as an adviser either, except when the firm decides to raise funds through the stock market. The article calls for greater specialisation on the part of the banks so that they can avoid conflicts of interest arising out of the mismatch between their service priorities and the needs of their clientele.

Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:sae:jouent:v:6:y:1997:i:1:p:75-85

DOI: 10.1177/097135579700600105

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