Short- and long-term debt determinants in Swedish SMEs

Purpose - This paper aims to empirically investigate the capital structure determinants of small and medium-sized enterprises (SMEs) with a particular focus on short- and long-term debt. Design/methodology/approach - Several methods were used to analyse a sample of 15,897 Swedish SMEs for which complete financial information was available for a four-year period following the 2008 financial crisis, i.e. the 2009-2012 period. Findings - The results indicate that eight explanatory variables – i.e. size, age, growth, profitability, liquidity, asset tangibility, non-debt tax shields and industry affiliation – are associated to various extents with SME debt policy. Research limitations/implications - The current study is limited to examining a sample of Swedish SMEs in five industry sectors covering the 2009-2012 period. Further research could examine the generalizability of the present results by considering other countries, industry sectors and periods. Practical implications - As debt policy influences firm performance, value and survival, SME owners and managers, regulators and financial institutions may benefit from studies considering a relatively large number of capital structure determinants, several of which are linked to short- and long-term debt in various ways. Originality/value - This study is one of the few to examine the determinants of short- and long-term debt in SMEs, which play a fundamental role in the economy, using a large-scale cross-sectional database covering a period following the 2008 financial crisis.