Financing Gap for SMES and the Mezzanine Capital

Abstract

Mezzanine capital is a hybrid instrument which combines the benefits of debt and equity

Overview and Estimation of the 2008 Financial and Economic Crisis ‘Effect Size‘ on SME Capital Structures: Case of Slovenia

“…While we could not in absolute evaluate either the supply of or demand for such funds, due to issues discussed by Vasilescu (2010), our analyses have shown significant 'pressures' on the demand side, which were not followed by proportional increases or adjustments on the supply side, leading to the widening of the mismatch (gap). In terms of hypothesis 2, the results of our power analyses and the corresponding effect sizes have clearly shown that large companies were able to secure higher levels of additional financing, decreasing inventories and adjusting their net working capital.…”

“…In this regard, we used a novel power analysis methodological approach. Complementing and extending the work by Vasilescu (2010) on the SME financing gap publish recently in Ekonomska istraživanja we have employed a differential approach, and further estimated the effect size changes in company capital structures in Slovenia.…”

“…In this regard, we use a novel power analysis methodological approach, to estimate the "effect sizes" of the crisis. This paper addresses not only a growing interest in SME financing (gaps), and SME capital structures (Parker, 2002;Cressy, 2002), but also responds to the call of the European Investment Fund (2008) andOECD (2006) to develop a 'practically-oriented' assessment approaches in these areas, despite the illusiveness of estimating such a gap (Vasilescu, 2010). The paper narrows an empirical gap in the literature related to SME financing, and SME financing in transition countries.…”

“…Despite the acknowledgement and importance of the SME financing gap, many believe this gap to be "immeasurable" (JEREMIE, 2007;Vasilescu, 2010). While Claessens & Tzioumis (2006, p. 8) stress "the absence of a unified conceptual framework for data collection", with most collected data being of "ad hoc nature, with varying definitions over time," the European Investment Fund and its JEREMIE program believe "the primary challenges are in the form of data availability and the feasibility of measuring the gap between current supply and potential demand" (JEREMIE, 2007, p. 25).…”

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“…The ability of SMEs to grow depends highly on their potential to invest in restructuring, innovation and qualification. But all of these investments need capital and therefore access to finance (Giurca Vasilescu, 2010).…”