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European SME Financing: An Empirical Taxonomy

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Contemporary Developments in Entrepreneurial Finance

Part of the book series: FGF Studies in Small Business and Entrepreneurship ((FGFS))

Abstract

This study investigates financing patterns of European SMEs by looking at a large number of different financing instruments and their complementary and substitutive effects, using the SAFE dataset collected in 2015. We develop an empirical taxonomy of SME financing patterns in Europe to analyse SME financing, applying cluster analyses. Our cluster analysis identifies seven distinct SME financing types based on the financing instruments used: mixed-financed SMEs with focus on other loans, mixed-financed SMEs with focus on retained earnings or sale of assets, state-subsidised SMEs, debt-financed SMEs, trade-financed SMEs, asset-based financed SMEs and internally financed SMEs. Moreover, the SME financing types can not only be profiled according to their firm-, product-, industry- and country-specific characteristics but also to macroeconomic variables. Our findings can support policy makers in assessing the impact of changes in policy measures for SME financing.

A prior version of this chapter has been part of the EIF Working Paper series: Masiak, C., Moritz, A. and Lang, F. (2017): Financing Patterns of European SMEs Revisited: An Updated Empirical Taxonomy and Determinants of SME Financing Clusters, EIF Working Paper 2017/40 and the doctoral dissertation of Christian Masiak “Financing SMEs and Entrepreneurial Opportunities: Firm- and Regional-Level Investigations from Europe” awarded by Trier University (Germany) in 2018. In contrast to the working paper and dissertation, this version is shortened significantly and focusses on macroeconomic differences.

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Notes

  1. 1.

    For an entire analysis of all passive variables, such as firm-, product- and industry-specific characteristics, please refer to the following EIF Working Paper: Masiak, C., Moritz, A., and Lang, F. (2017): Financing Patterns of European SMEs Revisited: An Updated Empirical Taxonomy and Determinants of SME Financing Clusters, EIF Working Paper. Available at: http://www.eif.org/news_centre/publications/EIF_Working_Paper_2017_40.htm. Accessed 01 October 2018.

  2. 2.

    Refer to Moritz (2015) who provides a comprehensive and detailed literature review on SME financing and its influencing factors.

  3. 3.

    Please refer to the EIF Working Paper for a detailed explanation of the variables included: Masiak, C., Block, J., Moritz, A., Lang, F., und Kraemer-Eis, H. (2017): Financing Micro Firms in Europe: An Empirical Analysis, EIF Working Paper 2017/44, available at: http://www.eif.org/news_centre/publications/eif_wp_44.pdf.

  4. 4.

    For a detailed analysis of the taxonomy concerning firm-, product- and industry-specific variables, please refer to EIF Working Paper: Masiak, C., Moritz, A., and Lang, F. (2017): Financing Patterns of European SMEs Revisited: An Updated Empirical Taxonomy and Determinants of SME Financing Clusters, EIF Working Paper. Available at: http://www.eif.org/news_centre/publications/EIF_Working_Paper_2017_40.htm. Accessed 01 October 2018.

  5. 5.

    An example of such an approach are the ex-ante assessments that have been performed on behalf of countries and regions in Europe as a prerequisite to implement financial instruments under the European Structural and Investment Funds. See for an overview of such assessments with respect to SME financing Kraemer-Eis, H., and Lang, F. (2014): A Practical Approach to the Market Analysis Part of SME-Related Ex-Ante Assessments. In: “European Structural and Investment Funds Journal (EStIF)” 2014/3, Lexxion, November 2014, pp. 200–211. Available at: http://www.eif.org/news_centre/research/index.htm (accessed 11 October 2018).

  6. 6.

    A notable exception is Masiak et al. (in press).

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Authors and Affiliations

  1. Trier University, Trier, Germany

    Christian Masiak & Alexandra Moritz

  2. Research & Market Analysis, European Investment Fund, Luxembourg City, Luxembourg

    Frank Lang

Authors
  1. Christian Masiak
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  2. Alexandra Moritz
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  3. Frank Lang
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Corresponding author

Correspondence to Alexandra Moritz .

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Editors and Affiliations

  1. Trier University, Trier, Germany

    Alexandra Moritz  & Joern H. Block  & 

  2. Fulda University of Applied Sciences, Fulda, Germany

    Stephan Golla

  3. University of Siegen, Siegen, Germany

    Arndt Werner

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Masiak, C., Moritz, A., Lang, F. (2020). European SME Financing: An Empirical Taxonomy. In: Moritz, A., Block, J.H., Golla, S., Werner, A. (eds) Contemporary Developments in Entrepreneurial Finance. FGF Studies in Small Business and Entrepreneurship. Springer, Cham. https://doi.org/10.1007/978-3-030-17612-9_1

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