Bank Borrowing, Small Firms, and the USM

Roger Buckland and Edward Davis

Chapter 8 in The Future of Financial Systems and Services, 1990, pp 126-140 from Palgrave Macmillan

Abstract: Abstract In this chapter we address the issue of small firms’ access to bank finance, in the context of their entry to secondary equity markets and specifically Britain’s Unlisted Securities Market (the USM, set up by the Stock Exchange in late 1980). Previous research, such as Bates (1964), Wilson (1979a), or Ray and Hutchinson (1983), indicates that small companies employ more debt, generally in the form of short-term borrowing from trade creditors and the banking sector, in their capital structures. That research suggests that, given the risk associated with small firm lending, banks could be reluctant to lend in the absence of a strong equity capitalisation.

Keywords: Small Firm; Total Asset; Stock Exchange; Banking Sector; Agency Problem (search for similar items in EconPapers)
Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-10439-0_8

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DOI: 10.1007/978-1-349-10439-0_8

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