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Capital structure and growth of the firms in the backward regions of the south Italy

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  • Domenico Sarno

Abstract

In this article it is shown that the growth of southern Italian firms is financed mostly by internal finance, since external financing is more problematic and costly. Hence firm growth is subject to financial constraints. The economics of financial constraints deals with the relationship of financial structure to firm growth. Consequently, the 'financial growth cycle' is used to analyse the features of the capital structure of the Mezzogiorno's SMEs compared to Italy-wide SMEs. The growth-cash flow nexus is then empirically analysed by using the Gibrat growth model enriched by the cash flow variable.

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  • Domenico Sarno, 2008. "Capital structure and growth of the firms in the backward regions of the south Italy," Applied Financial Economics, Taylor & Francis Journals, vol. 18(10), pages 821-833.
    • Handle: RePEc:taf:apfiec:v:18:y:2008:i:10:p:821-833
    DOI: 10.1080/09603100701222309
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    Citations

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    Cited by:

    1. Succurro, Marianna, 2014. "Intangible assets finance: a complementary or substitution effect between external and internal channels? Evidence from the Italian divide," MPRA Paper 57247, University Library of Munich, Germany.
    2. Coad, Alex, 2010. "Neoclassical vs evolutionary theories of financial constraints: Critique and prospectus," Structural Change and Economic Dynamics, Elsevier, vol. 21(3), pages 206-218, August.
    3. Idrees Khawaja & Sajawal Khan, 2016. "Growth Diagnostics: Pakistan," PIDE-Working Papers 2016:143, Pakistan Institute of Development Economics.
    4. Angelo Castaldo & Rosanna Pittiglio & Filippo Reganati & Domenico Sarno, 2023. "Access to bank financing and start‐up resilience: A survival analysis across business sectors in a time of crisis," Manchester School, University of Manchester, vol. 91(3), pages 141-170, June.
    5. Paulo Nunes & Zélia Serrasqueiro & João Leitão, 2013. "Assessing the nonlinear nature of the effects of R&D intensity on growth of SMEs: a dynamic panel data approach," Journal of Evolutionary Economics, Springer, vol. 23(1), pages 97-128, January.
    6. Cinquegrana, Giuseppe & Donati, Cristiana & Sarno, Domenico, 2012. "Financial constraints and relationship lending in the growth of italian SMEs," MPRA Paper 39825, University Library of Munich, Germany.
    7. Idrees Khawaja & Nasir Iqbal, 2019. "Determinants of Expansion of Micro and Small Firms and State of Entrepreneurship in Pakistan," PIDE-Working Papers 2019:160, Pakistan Institute of Development Economics.
    8. Miroslav Mateev & Yanko Anastasov, 2010. "Determinants of small and medium sized fast growing enterprises in central and eastern Europe: a panel data analysis," Financial Theory and Practice, Institute of Public Finance, vol. 34(3), pages 269-295.
    9. Anna GIUNTA & Domenico SARNO, 2009. "Firm’S Financing And Industrial Structure In The Less Developed Regions Of The South Italy," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 4(4(10)_Win), pages 509-525.
    10. Filippo di Pietro & Maria Elena Bontempi & María-José Palacín-Sánchez & Reyes Samaniego-Medina, 2019. "Capital Structure across Italian Regions: The Role of Financial and Economic Differences," Sustainability, MDPI, vol. 11(16), pages 1-14, August.
    11. Damiana Giuseppina Costanzo & Damiano Bruno Silipo & Marianna Succurro, 2013. "Over-Indebtedness And Innovation: Some Preliminary Results," Working Papers 201304, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.

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