The financing methods for small and medium companies: comparison between Italy and Germany

Abstract

PurposeThe aim of the research is to identify the appropriate financing methods for small and medium-sized enterprises (with particular reference to alternative instruments to the banking ones), by comparing Italian and German companies. MethodologyBased on a sample of Italian and German small-medium sized enterprises and thanks to a quantitative method, the research methodology was developed by the following logical steps: i) illustration of the informative matrix used, thanks to which it's possible to identify different types of financing instruments (also those alternative to the banking ones) the most suitable for the analyzed companies; ii) adoption of the informative matrix to the sample of Italian and German companies; iii) comparison Italy-Germany. FindingsSeveral differences emerged between Italian and German small and medium-sized companies, regarding the most suitable suggested financing forms. The degree of effectiveness of the financing instruments alternative to the debt appears influenced by the analysed space-time context. With reference to Italy, the effectiveness of these instruments is rather modest. With reference to Germany, it occurs the opposite scenario. OriginalityThe originality of the paper is linked to the current profound changes in both economic and normative terms. The research tries to lead companies to change their financial culture, also considering financial instruments alternative to the bank debt particularly suitable for small and medium-sized enterprises.

Is Trade Credit a Sustainable Resource for Medium-Sized Italian Green Companies?

“…Both steps are useful objects of future research, but they recall the importance of promoting a dialogue between different actors (companies and financial intermediaries) about the contents and the implications of the green economy for local development policies. Our results seem to suggest that, particularly in case of green companies, trade credit is a useful instrument for providing liquidity, particularly by stronger in favor of weaker firms (bigger, more profitable, and older MEs tend to offer more trade credit to their clients than that received, while smaller, less profitable, and younger MEs tend to rely more on trade credit to finance purchases than clients) [130]. To the extent that green manufacturing processes are better known and evaluated by companies belonging to the same industry, trade credit could be considered much more than a component of financial risk management policy; rather, it could be a tool for consolidating strategic long-term relationships with clients and suppliers.…”

Italy’s Small Exporting Companies: Globalization and Sustainability Issues

“…In Italy, bank financing remains the most widespread source of funding. Therefore, small Italian companies have a high financial dependency on the banking system [75]. According to Del Giudice, Della Peruta and Carayannis [76], this is due to several factors, such as the abundance of loans granted in the past and the traditional ability of Italian banks to meet the financial needs of firms.…”

My name is bond, Pecorino Bond

“…In this economic context, it is vital for all enterprises, but in particular for SMEs, to find alternative channels of debt and equity assets (Caratelli and Fattobene, 2018). In recent years, a new financial instrument, known as a mini-bond (Altman et al , 2020; Giacosa and Alberto, 2016; Rossi et al , 2016), has attracted particular interest, but there is still very little literature available exploring innovative financial instruments in the agri-food sector specifically, such as the Pecorino case.…”

“…In recent years, among the channels of supply of financial resources alternative to the banking system, a “new” financial instrument, known as a mini-bond, has attracted particular interest (Altman et al , 2020; Giacosa and Alberto, 2016; Rossi et al , 2016). With this goal, reference is made to debt securities (of any maturity) issued by companies with listed or unlisted shares, following a series of regulatory changes introduced in Italy, like Crescita[2] and Destinazione Italia[3].…”

“…In order to achieve these objectives, in February 2013, the Italian Companies and Exchange Commission (Consob) implemented Extra-MOT, a new segment in the market dedicated to listing bonds, commercial paper, and project finance bonds, whose trading is open only to professional investors. (Altman et al , 2020; Giacosa and Alberto, 2016; Rossi et al , 2016).…”