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Financial Structure and Diversification of European Firms. ESRI WP492, September 2014

Lawless, Martina and O'Connell, Brian and O'Toole, Conor (2014) Financial Structure and Diversification of European Firms. ESRI WP492, September 2014. [Working Paper]

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    Small and medium enterprises have been shown to rely mainly on banks for funding and, unlike larger firms, rarely have direct access to capital markets. This paper looks at the extent to which SMEs avail of a wider range of funding options and how their use differs across firms and countries. Using the Survey of Access to Finance in Europe (SAFE) covering sixteen Euro Area countries, we find that firms are currently using two or three sources of finance to fund their firm’s operations and have had previous experience of other types of funding. There are some noticeable differences across countries with funding types in peripheral economies generally being less diversified. Differences across firm size and age groups are more marked than cross-country variation, with smaller and younger firms significantly more reliant on a limited set of finance types and older, larger firms having more diversified financial structures. Looking at individual sources of financing, we find that trade credit and informal sources of finance are extremely prevalent across all countries, with Irish firms being particularly likely to use them as sources of funding.

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    Item Type: Working Paper
    Subjects for non-EU documents: EU policies and themes > Policies & related activities > economic and financial affairs > business/private economic activity
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Economic and Social Research Institute (ESRI), Dublin > ESRI Working Papers
    Depositing User: Alyssa McDonald
    Official EU Document: No
    Language: English
    Date Deposited: 13 Dec 2018 13:11
    Number of Pages: 28
    Last Modified: 13 Dec 2018 13:11

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