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Are the implications of the financial growth cycle confirmed for Spanish SMEs?

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  • Javier Sánchez-Vidal
  • Juan Francisco Martín-Ugedo

Abstract

The aim of this paper is to analyze whether some of the empirical implications of the financial growth cycle hold in a sample of Spanish SMEs. We use a sample of 5,944 observations for the year 2007 and test several hypotheses using MANOVA analysis. The results show that companies tend to have different financing structures depending on their age and size. Hypotheses about trade credit, short term debt and risk are confirmed with respect to age, as the younger companies tend to use proportionally more trade credit and short term debt, and are riskier. Size is also associated in the expected way with trade credit, relative trade credit and relative short-term financial debt. On the other hand hypotheses about equity and the financing deficit are not confirmed. The effect of a pecking order behaviour over a long period of time may provide an explanation of why these two hypotheses are not confirmed.

Suggested Citation

  • Javier Sánchez-Vidal & Juan Francisco Martín-Ugedo, 2011. "Are the implications of the financial growth cycle confirmed for Spanish SMEs?," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 13(4), pages 637-665, July.
    • Handle: RePEc:taf:jbemgt:v:13:y:2011:i:4:p:637-665
    DOI: 10.3846/16111699.2011.620161
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    References listed on IDEAS

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    1. Zsuzsanna Fluck & Douglas Holtz-Eakin & Harvey S. Rosen, 1998. "Where Does the Money Come From? The Financing of Small Entrepreneurial Enterprises," New York University, Leonard N. Stern School Finance Department Working Paper Seires 98-038, New York University, Leonard N. Stern School of Business-.
    2. Joseph P.H. Fan & Sheridan Titman & Garry Twite, 2010. "An International Comparison of Capital Structure and Debt Maturity Choices," NBER Working Papers 16445, National Bureau of Economic Research, Inc.
    3. David B. Audretsch, 1995. "Innovation and Industry Evolution," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011468, April.
    4. Hernando, Ignacio & Martínez Pagés, Jorge, 2001. "Is there a bank lending channel of monetary policy in Spain?," Working Paper Series 99, European Central Bank.
    5. Andrew Benito, 2003. "The capital structure decisions of firms: is there a pecking order?," Working Papers 0310, Banco de España.
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