EIB Working Paper 2024/08 - Do financing conditions pose a threat to the performance and transformation of SMEs?

The availability of internal and external financing sources significantly influences firms’ investments and growth. Even profitable firms with ample financing in normal times can be adversely affected by demand and supply shocks such as the COVID-19 pandemic, the energy crisis, or the recent tighten...

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التفاصيل البيبلوغرافية
التنسيق: Online
اللغة:الإنجليزية
منشور في: European Investment Bank 2025
الموضوعات:
الوصول للمادة أونلاين:ONIX_20250402_9789286158506_21
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collection Directory of Open Access Books
description The availability of internal and external financing sources significantly influences firms’ investments and growth. Even profitable firms with ample financing in normal times can be adversely affected by demand and supply shocks such as the COVID-19 pandemic, the energy crisis, or the recent tightening of financing conditions. This paper examines the impact of funding difficulties on firms’ investment, performance and growth during normal periods and periods affected by external shocks, using a regression adjustment treatment effect approach. It distinguishes between structural barriers to external financing and cyclical deteriorations in financing conditions, while controlling for other major investment barriers. The analysis uses data from eight years of the EIB Investment Survey (EIBIS). Empirical evidence shows that micro and small firms, as well as leading innovators, are particularly vulnerable to deteriorating funding conditions. Results indicate that firms lagging in digitalisation and green investments face more of a structural financing issue than a cyclical one. Consequently, policy support should be oriented towards these structural financing impediments to ensure a fair and faster transformation.
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spelling doab-20.500.12854ir-1580772025-07-30T09:00:08Z EIB Working Paper 2024/08 - Do financing conditions pose a threat to the performance and transformation of SMEs? thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting The availability of internal and external financing sources significantly influences firms’ investments and growth. Even profitable firms with ample financing in normal times can be adversely affected by demand and supply shocks such as the COVID-19 pandemic, the energy crisis, or the recent tightening of financing conditions. This paper examines the impact of funding difficulties on firms’ investment, performance and growth during normal periods and periods affected by external shocks, using a regression adjustment treatment effect approach. It distinguishes between structural barriers to external financing and cyclical deteriorations in financing conditions, while controlling for other major investment barriers. The analysis uses data from eight years of the EIB Investment Survey (EIBIS). Empirical evidence shows that micro and small firms, as well as leading innovators, are particularly vulnerable to deteriorating funding conditions. Results indicate that firms lagging in digitalisation and green investments face more of a structural financing issue than a cyclical one. Consequently, policy support should be oriented towards these structural financing impediments to ensure a fair and faster transformation. 2025-04-03T05:18:45Z 2025-04-03T05:18:45Z 2025-04-02T13:56:20Z 2024 book ONIX_20250402_9789286158506_21 https://library.oapen.org/handle/20.500.12657/100564 9789286158506 https://directory.doabooks.org/handle/20.500.12854/158077 eng open access image/jpeg n/a https://library.oapen.org/bitstream/20.500.12657/100564/1/9789286158506_pdf.pdf European Investment Bank 10.2867/1358340 10.2867/1358340 feca012f-a3d8-4aac-95aa-b6cf4bdbed7c 9789286158506 36 Luxembourg open access
spellingShingle thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting
thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting
EIB Working Paper 2024/08 - Do financing conditions pose a threat to the performance and transformation of SMEs?
title EIB Working Paper 2024/08 - Do financing conditions pose a threat to the performance and transformation of SMEs?
title_full EIB Working Paper 2024/08 - Do financing conditions pose a threat to the performance and transformation of SMEs?
title_fullStr EIB Working Paper 2024/08 - Do financing conditions pose a threat to the performance and transformation of SMEs?
title_full_unstemmed EIB Working Paper 2024/08 - Do financing conditions pose a threat to the performance and transformation of SMEs?
title_short EIB Working Paper 2024/08 - Do financing conditions pose a threat to the performance and transformation of SMEs?
title_sort eib working paper 2024 08 do financing conditions pose a threat to the performance and transformation of smes
topic thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting
thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting
topic_facet thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting
thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting
url ONIX_20250402_9789286158506_21