Historical financing of small- and medium-size enterprises

Cull, Robert; Davis, Lance E.; Lamoreaux, Naomi R.; Rosenthal, Jean‐Laurent

doi:10.1016/j.jbankfin.2006.05.005

Cited by 142 publications

(57 citation statements)

References 61 publications

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“…Evidence in Caprio and Vittas (1997) and Cull et al (2006) confirms this. Many SHFs are not run according to the shareholder value model, since they may be committed to reaching the poor (Reille and Forster, 2008).…”

Section: Governance and Performance In Mfissupporting

confidence: 54%

Performance and governance in microfinance institutions

Mersland¹,

Strøm

2009

Journal of Banking & Finance

508

547

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We examine the relationship between firm performance and corporate governance in microfinance institutions (MFI) using a self-constructed global dataset on MFIs collected from third-party rating agencies. Using random effects panel data estimations, we study the effects of board and CEO characteristics, firm ownership type, customer-firm relationship, and competition and regulation on an MFI's financial performance and outreach to poor clients. We find that financial performance improves with local rather than international directors, an internal board auditor, and a female CEO. The number of credit clients increase with CEO/chairman duality. Outreach is lower in the case of lending to individuals than in the case of group lending. We find no difference between non-profit organisations and shareholder firms in financial performance and outreach, and we find that bank regulation has no effect. The results underline the need for an industry specific approach to MFI governance. 94

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Section: Governance and Performance In Mfissupporting

confidence: 54%

Performance and governance in microfinance institutions

Mersland¹,

Strøm

2009

Journal of Banking & Finance

508

547

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“…In a recent large European study Iannotta et al (2007) found that investor owned banks have higher profitability, but have higher operating costs than non-investor owned banks. In historic terms pro-poor banking has generally been dominated by mutual and non-profit ownership, not by investor ownership (Cull et al, 2006, Hansmann, 1996. The question remains; why do policy makers advocate a shareholder charter for MFOs?…”

Section: Microfinance Policies and Ownership Theoriesmentioning

confidence: 99%

Performance and trade‐offs in Microfinance Organisations—Does ownership matter?

Mersland¹,

Strøm

2008

J of Intl Development

141

114

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Policy advocates argue for the transformation of non-government Microfinance Organizations (MFOs) into shareholder owned firms. This paper investigates whether the proposed superiority of shareholder owned MFOs is empirically supported. The findings indicate that the difference between shareholder owned MFOs and non-government MFOs is minimal. Our results contradict established paradigms and policy guidelines in the industry. However, the results are not necessarily surprising since ownership theories support our findings. So do also studies from the general banking markets as well as historical studies. Adaptation of legal frameworks allowing well-performing NGOs to mobilize savings appears to be a better option than transformation.68

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“…Hence, 28 European countries are included, where 27 countries are members of the EU (excluding Malta) and Norway, which is a member of the European Economic Area (EEA) and therefore closely linked to the EU. The importance of the macroeconomic, legal and institutional environment and their impact on firm financing has been shown in a number of studies (Cull et al 2006;Demirgüç-Kunt and Levine 1999;La Porta et al 1997;Levine 2002;Rajan and Zingales 1995). Previous research found that countries with more developed financial markets and better protection of property rights provide a broader range of financing instruments (Beck et al 2008;Chavis et al 2011;Jõeveer 2012).…”

Section: Country-specific Variablesmentioning

confidence: 99%

Financing Patterns of European SMEs An Empirical Taxonomy

2015

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PrefaceSmall and medium-sized enterprises (SMEs) are often called the backbone of the European economy, contributing to job creation and economic growth. In 2013, more than 21.5m of SMEs in the European Union made for more than 99% of all non-financial enterprises, employed almost 89m people (67% of total employment), and generated 58% of total added value. However, access to finance is more difficult for SMEs than for larger enterprises, not only during the current financial and economic crisis, but also on a permanent structural basis, due to market imperfections in SME financing (see Kraemer-Eis, Lang and Gvetadze, 2015, for more details).The European Investment Fund (EIF) supports Europe's SMEs by improving their access to finance through a wide range of selected financial intermediaries. To this end, the EIF primarily designs, promotes and implements equity and debt financial instruments which specifically target SMEs. In this role, the EIF fosters EU objectives in support of entrepreneurship, growth, innovation, research and development, and employment.EIF's Research & Market Analysis team has established a research cooperation with the Chair of Management at the University of Trier. This EIF Working Paper is one result of the successful cooperation. A follow-on project, building on the findings of the presented analysis and financially supported by the EIB Institute under the Knowledge Programme, is scheduled to start soon.Even though research in SME financing has strongly increased over the recent years, the financing patterns of SMEs in Europe are still not well analysed. Previous empirical studies have shown that firm-, product-, industry-, and country-specific factors influence the financing of SMEs. However, there are only few studies with a holistic perspective taking into account the interrelationships between different financing instruments and their determinants.The research, presented in this EIF Working Paper, provides an integrative perspective of SME financing patterns by identifying and analysing in detail the use of various financing instruments by SMEs. The findings can support the design and development of SME financing instruments across Europe.We thank the researchers for their important work and the very good cooperation with the EIF. We also thank the participants of a seminar with the researchers, which took place at EIF, as well as the participants of a workshop that took place at the European Central Bank, for fruitful discussions. This EIF Working Paper takes a holistic approach to investigate SME financing patterns in Europe by performing a cluster analysis including 12,726 SMEs in 28 European countries. The results reveal that SME financing in Europe is not homogenous but that different financing patterns exist. The cluster analysis identifies six distinct SME financing types: mixed-financed SMEs, statesubsidised SMEs, debt-financed SMEs, flexible-debt-financed SMEs, trade-financed SMEs and internally-financed SMEs. These SME financing types differ according to the number of fin...

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Historical financing of small- and medium-size enterprises

Cited by 142 publications

References 61 publications

Performance and governance in microfinance institutions

Performance and governance in microfinance institutions

Performance and trade‐offs in Microfinance Organisations—Does ownership matter?

Financing Patterns of European SMEs An Empirical Taxonomy

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