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Suitable or non-suitable? An investigation of Eurozone SME access to market-based finance

Paola Bongini, Annalisa Ferrando, Emanuele Rossi and Monica Rossolini

No 12006, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The present paper provides in-depth analysis of SME access to capital markets among Eurozone countries. First, we detect the factors - at the firm and country level - that are able to influence the likelihood of SME access to market-based finance. Second, we construct an index of what we call "market suitability",, i.e., a score that can be measured at the dimensional, sectoral and national level, which provides the percentage of firms potentially fit for market-based finance. Our results highlight that a few Eurozone countries seem to have deployed the "potential" for capital market financing, while there exists a large percentage of unexploited potential for firms fit for market-based finance. It should also be highlighted that overall business conditions - measured by GDP growth, the degree of development of domestic financial markets, and the quality of the legal and judicial enforcement system - greatly influence a firm's market suitability. In the period under consideration (2000-2014), macro factors tended to reduce the likelihood of SME access to market-based finance in most countries in our sample

Keywords: Eurozone; market-based finance; SMEs (search for similar items in EconPapers)
JEL-codes: G10 G32 L25 L26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-eec, nep-ent and nep-sbm
Date: 2017-04
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