Financial crisis and SME capital structure: Swedish empirical evidence

Purpose - The purpose of this paper is to empirically examine capital structure determinants of small- and medium-sized enterprises (SMEs) during and after the global financial crisis. Design/methodology/approach - Statistical methods, including ordinary least squares and the generalised method of moments, were used to analyse a sample of over 40,800 Swedish SMEs operating in four industries during the 2008–2015 period. Findings - The results indicate that the independent variables – i.e. financial crisis, profitability, size, tangibility and industry affiliation – to various degrees explain changes in short-term debt (STD) and long-term debt (LTD) ratios. In particular, the empirical findings indicate that the sampled SMEs tended to rely more on STD and LTD during (2008–2009) than after (2010–2015) the financial crisis. Research limitations/implications - Due to data availability, the current study is limited to a sample of Swedish SMEs in four industries covering eight years. Further research could examine the generalisability of these findings by investigating other firms operating in other industries and other countries. Originality/value - This study is one of few examining determinants of short- and long-term SME debt during and after the global financial crisis, using data from a large-scale cross-sectional database.