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1 – 10 of over 1000Bastien Bezzon, Geoffroy Labrouche and Rachel Levy
This study analyzes the role of regional cooperative banks in identifying and financing small and medium-sized enterprises (SMEs) from a proximity perspective. Access to finance…
Abstract
Purpose
This study analyzes the role of regional cooperative banks in identifying and financing small and medium-sized enterprises (SMEs) from a proximity perspective. Access to finance is a major challenge for SMEs. Regional cooperative banks can remove this barrier based on cooperative bank's characteristics and geographic proximity to SMEs. Understanding the interplay between these financial actors and firms can contribute to a better support of SMEs development.
Design/methodology/approach
The results are based on a case study of eight SMEs located in southwestern France. Interviews were conducted with two regional cooperative funds and eight SMEs. The interview guide included questions related to the company, the projects financed and how financing was accessed.
Findings
Results reveal that a combination of three forms of proximity allows regional cooperative banks and SMEs to establish effective financing operations. They show that regional cooperative banks are key players in the existing financing mechanisms for SMEs. Such financing is often used to gain access to larger players at a later stage. The findings suggest the need for public policies that promote the integration of financing actors in regional ecosystems to advance SMEs' development.
Originality/value
This article examines how SMEs access financing, with a focus on regional cooperative banks, which have received little attention in the literature. Moreover, the relationships between these actors are studied through the lens of proximity. Regional cooperative banks are able to finance projects that may have been overlooked by traditional banks due to trust-building local dynamics.
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Viktor Ström, Nima Sanandaji, Saeid Esmaeilzadeh and Mouna Esmaeilzadeh
The purpose of this paper is to investigate the potential link between Sweden’s high reliance on equity capital financing among small and medium-sized enterprises (SMEs) and its…
Abstract
Purpose
The purpose of this paper is to investigate the potential link between Sweden’s high reliance on equity capital financing among small and medium-sized enterprises (SMEs) and its recognition as the most innovative economy in Europe according to the European Innovation Scoreboard (EIS). This paper examines the idea that the high levels of trust within Swedish society can explain why private equity financing is more prevalent among Swedish SMEs.
Design/methodology/approach
To test these ideas, the authors use data from the Survey on Access to Finance for Enterprises to measure the private equity reliance of firms. The authors also use the EIS to measure the innovation capacity of nations and various aspects of SMEs’ innovation activities. Finally, societal levels of trust are measured through the World Value Survey.
Findings
First, the authors find that European countries with a higher proportion of SMEs relying on equity financing tend to be ranked as more innovative by the EIS. Second, the authors find that the correlation between a nation’s share of SMEs relying on equity financing and their level of innovation activities is marginally stronger for product innovations than for business process innovations. Third, the authors find that countries with higher levels of trust tend to have higher equity capital reliance among SMEs.
Originality/value
This study builds upon previous research on equity capital and SMEs’ innovation activity while introducing new insights into the relationship between societal trust and equity financing.
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Financing remains a serious concern for firms and is considered the main hurdle in the growth and development of small and medium enterprises (SMEs). Recently, a new stream of…
Abstract
Purpose
Financing remains a serious concern for firms and is considered the main hurdle in the growth and development of small and medium enterprises (SMEs). Recently, a new stream of financing (SCF; supply chain finance) has emerged to meet the financing issues of SMEs. Therefore, measuring SCF is essential to support SMEs’ operations. This study aims to develop and validate the SCF scale based on extant literature.
Design/methodology/approach
Using a mixed-method approach, this study recruited different samples of SME entrepreneurs to confirm the internal consistency, assess construct validity and check the item structure of the SCF scale in AMOS.
Findings
The outcomes of confirmatory factor analysis demonstrated the six factors of SCF (inventory financing, working capital optimization, reverse financing, fixed assets financing, logistics financing and order cycle financing) spread over 21 items. An interitem solid structure of the SCF scale offers invaluable contributions to the supply chain management literature.
Practical implications
This research supports SME entrepreneurs to obtain secure financing at the best cost, mitigating the risk of default, supporting the buyers’ payment terms, providing early payment to suppliers and strengthening the firm’s value chains. SMEs can obtain financing per their requirements to support their operational business processes. Moreover, SMEs can plan, manage and control finance-related transactional activities by correctly identifying financing solutions.
Originality/value
The present study contributes to SCM literature by developing and validating the SCF scale. To the best of the author’s knowledge, this is the first study that redefined SCF and identified its six dimensions.
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Nadia Yusuf, Inass Salamah Ali and Tariq Zubair
This study investigates the impact of US dollar volatility and oil rents on the performance of small and medium-sized enterprises (SMEs) in the Gulf Cooperation Council (GCC…
Abstract
Purpose
This study investigates the impact of US dollar volatility and oil rents on the performance of small and medium-sized enterprises (SMEs) in the Gulf Cooperation Council (GCC) region, with an emphasis on understanding how these factors influence SME financing constraints in economies with fixed currency regimes.
Design/methodology/approach
Employing a random effects panel regression analysis, this research considers US dollar volatility and oil rents as independent variables, with SME performance, measured through the financing gap, as the dependent variable. Controls such as trade balance, inflation deltas and gross domestic product (GDP) growth are included to isolate their effects on SME financing constraints.
Findings
The study reveals a significant positive relationship between dollar volatility and the financing gap, suggesting that increased volatility can exacerbate SME financing constraints. Conversely, oil rents did not show a significant direct influence on SME performance. The trade balance and inflation deltas were found to have significant effects, highlighting the multifaceted nature of economic variables affecting SMEs.
Research limitations/implications
The study acknowledges potential biases due to omitted variables and the limitations inherent in the use of secondary data.
Practical implications
Findings offer pertinent guidance for SMEs and policymakers in the GCC region seeking to develop strategies that mitigate the impact of currency volatility and support SME financing.
Originality/value
The research provides new insights into the dynamics of SME performance within fixed currency regimes, which significantly contributes to the limited literature in this area. The paper further underscores the complex connections between global economic factors and SME financial health.
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Aaron van Klyton, Mary-Paz Arrieta-Paredes, Vedaste Byombi Kamasa and Said Rutabayiro-Ngoga
The study explores how the intention to export affects financing and non-financing variables for small and medium-sized enterprises (SMEs) in a low-income country (LIC). The…
Abstract
Purpose
The study explores how the intention to export affects financing and non-financing variables for small and medium-sized enterprises (SMEs) in a low-income country (LIC). The objectives of this study are (1) to discern between regional and global exporting and (2) to evaluate its policymaking implications.
Design/methodology/approach
Primary survey data were collected from 330 Rwandan SMEs and were analysed using ordered logistic models as an application of the expectation-maximisation iterating algorithm, which was tested for robustness using a sampling model variation.
Findings
The results show that alternative sources of finance are the predominant choice to finance the intention to export within and outside Africa. As the scope of export intentions broadened from regional to global, there was a shift in preferences from less formal to more formal lending technologies, moving from methods like factoring to lines of credit. Moreover, reliance on bank officers became more significant, with increasing marginal effects. Finally, the study determined that government financing schemes were not relevant for SMEs pursuing either regional or global exporting.
Practical implications
Whilst alternative sources of finance predominate the export intentions of Rwandan SMEs, establishing a robust banking relationship becomes crucial for global exporting. Despite this implication, the intention to export should prompt more transparent communication regarding government financial support programmes. There is an opportunity for increased usage of relationship lending to customise support for SMEs involved in exporting, benefiting both the private and public sectors.
Originality/value
This study accentuates how export distance alters SME financing priorities. The results also contribute to understanding how the value of relationship lending changes when less familiar markets (i.e. global exporting) are the objective. Moreover, the study offers a new perspective on how institutional voids affect entrepreneurial financing decisions in LICs.
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Qiang Lu, Yudong Yang and Miao Yu
The purpose of this study is to examine how the quality management of small and medium-sized enterprises (SMEs) impacts their supply chain financing performance (SCFP). This study…
Abstract
Purpose
The purpose of this study is to examine how the quality management of small and medium-sized enterprises (SMEs) impacts their supply chain financing performance (SCFP). This study also investigates the mediating roles of organisational dependence between quality management and the SCFP of SMEs, as well as the moderating role of environmental dynamics.
Design/methodology/approach
Questionnaires were administered to 248 financial managers responsible for supply chain finance (SCF) in SMEs in China. Data analysis techniques used include necessary condition analysis and multiple regression analysis.
Findings
Research findings show that, in SCF, the quality management of SMEs positively predicts their SCFP through the mediation of the organisational dependence of the focal enterprises in the supply chain network. Environmental dynamics are also found to moderate the relationship between quality management and SCFP through the organisational dependence of capital providers.
Originality/value
To the best of our knowledge, this is the first study to explore the relationships between SMEs' quality management and their SCFP. Also, this study provides a new theoretical lens through which to study SCF by introducing signalling theory.
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Literature has pointed that conventional financial development theories have inconclusive role on motivating new businesses. New ventures often consider the conventional system…
Abstract
Purpose
Literature has pointed that conventional financial development theories have inconclusive role on motivating new businesses. New ventures often consider the conventional system that passes through risk and provides fixed-interest lending as a burden. Comparatively, Islamic finance contributes using participative and equitable substitute for startups and has a potential in promoting new businesses. This study aims to investigate the holistic financial development index quadratic effect on entrepreneurship and include the moderating role of Islamic financing at national level.
Design/methodology/approach
Islamic banks of 21 nations constitute the unbalanced panel data. Financial development and entrepreneurship indices were developed using factor analysis and panel median regression to estimate the nonlinear financial market development effects and Islamic financing moderation model.
Findings
The results indicated that low financial market development is entrepreneurship deterring because of interest burden effect, which could be eased with a proportional increase in the Islamic financing, which is participative. The moderating effect has led to the categorization of the sample countries into entrepreneurship promoting and entrepreneurship discouraging with respect to the current incidence of financial market development and Islamic financing, which can help policymakers in understanding the entrepreneurship promoting combination of financial development and Islamic financing.
Research limitations/implications
Central banks and Shari’ah advisory councils can adopt Islamic financing transition in the national financial inclusion policy for new business facilitation.
Originality/value
This study is instrumental in exploring the assessment of introducing Islamic financing while developing the financial sector on multidimensional entrepreneurship.
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This study aims to investigate the role of bank ownership (foreign versus domestic) and the type of service (Islamic versus conventional) on bank lending to large enterprises and…
Abstract
Purpose
This study aims to investigate the role of bank ownership (foreign versus domestic) and the type of service (Islamic versus conventional) on bank lending to large enterprises and small and medium enterprises (SMEs).
Design/methodology/approach
Based on previous literature, the study proposes that foreign banks lend more to large enterprises and less to SMEs than domestic banks do. It also proposes that Islamic banks lend more to SMEs than conventional banks do. It utilizes unique hand-collected data of Jordanian banks from 2007 to 2018 to carry out its investigation. It applies regression estimation methods and propensity score matching to test its hypotheses.
Findings
Consistent with prior empirical evidence, the findings show that foreign banks lend significantly less (more) to SMEs (large enterprises) than their domestic counterparts. However, the findings indicate that Islamic banks lend significantly less to SMEs than their conventional counterparts. Further analysis shows that Islamic banks operating in Jordan are ultimately owned by foreign investors hence their incentives to adopt full features of Islamic financial instruments are confounded by their incentives to utilize transaction lending technologies which in turn attenuates the expected positive impact of Islamic banking services on SMEs finance.
Originality/value
This research provides novel evidence on the impact of Islamic banks on SMEs finance as the results suggest that the success of Islamic finance in bridging the gap of SMEs finance is conditional on embracing its full features.
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Hang Yin, Jishan Hou, Chengju Gong and Chen Xu
The behavior of the entities in a small and medium-sized enterprise (SME) cooperation network is influenced by the core enterprise. Addressing the problem of how the network…
Abstract
Purpose
The behavior of the entities in a small and medium-sized enterprise (SME) cooperation network is influenced by the core enterprise. Addressing the problem of how the network vulnerability changes when the core enterprise is attacked is a challenging topic. The purpose of this paper is to reveal the failure process of SME cooperation networks caused by the failure of the core SME from the perspective of cascading failure.
Design/methodology/approach
According to the Torch High Technology Industry Development Center, Ministry of Science & Technology in China, 296 SMEs in Jiangsu province were used to construct an SME cooperation network of technology-based SMEs and an under-loading cascading failure model. The weight-based attack strategy was selected to mimic a deliberate node attack and was used to analyze the vulnerability of the SME cooperation network.
Findings
Some important conclusions are obtained from the simulation analysis: (1) The minimum boundary of node enterprises has a negative relationship with networks' invulnerability, while the breakdown probability has an inverted-U relationship with networks' invulnerability. (2) The combined effect of minimum boundary and breakdown probability indicates that the vulnerability of networks is mainly determined by the breakdown probability; while, minimum boundary helps prevent cascading failure occur. Furthermore, according to the case study, adapting capital needs and resilience in the cooperation network is the core problem in improving the robustness of SME cooperation networks.
Originality/value
This research proposed an under-loading cascading failure model to investigate the under-loading failure process caused by the shortage of resources when the core enterprise fails or withdraws from the SME cooperation network. Two key parameters in the proposed model—minimum capacity and breakdown probability—could serve as a guide for research on the vulnerability of SME cooperation networks. Additionally, practical meanings for each parameter in the proposed model are given, to suggest novel insights regarding network protection to facilitate the robustness and vulnerability in real SME cooperation networks.
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Charilaos Mertzanis and Asma Houcine
This study employs firm-level data to evaluate how the knowledge economy impacts the financing constraints of businesses across 106 low- and middle-income nations, focusing on the…
Abstract
Purpose
This study employs firm-level data to evaluate how the knowledge economy impacts the financing constraints of businesses across 106 low- and middle-income nations, focusing on the influence of technological transformation on corporate financing choices.
Design/methodology/approach
The research centers on privately held, unlisted firms and examines the distinct effects of knowledge at both the within-country and between-country levels using a panel dataset. Rigorous sensitivity and endogeneity analyses are conducted to ensure the reliability of the findings.
Findings
The findings indicate that greater levels of the knowledge economy correlate with reduced financing constraints for firms. However, this effect varies depending on the location within a country and across different geographical regions. Firms situated in larger urban centers and more innovative regions reap the most significant benefits from the knowledge economy when seeking external funding. Conversely, firms in smaller cities, rural areas and regions characterized by structural and institutional inefficiencies in knowledge generation experience fewer advantages.
Originality/value
The impact of knowledge exhibits variability not only within and among countries but also between poor and affluent developing nations, as well as between larger and smaller countries. The knowledge effect on firms' access to external finance is influenced by factors such as financial openness and development, educational quality, technological absorption capabilities and agglomeration conditions within each country.
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