Influential Article Review - Understanding the Funding Decisions of Italian SMEs

Abstract

This paper examines banking and finance. We present insights from a highly influential paper. Here are the highlights from this paper: Small and medium enterprises (SMEs) represent a large percentage of the corporate tissue of developed countries, but they do not have adequate attention. In fact, various researchers have focused their studies on larger and well-known companies. This paper aims to investigate the impact of corporate characteristics on the financial choices of SMEs, with a specific focus on agro-food micro companies. Access to finance is vital in business start-up, development, and growth for SMEs, all with hugely different needs and facing different challenges in terms of finance compared to large companies. The lack of equity invested in small enterprises makes them more dependent on other external sources (e.g. bank loans, overdraft, factoring and leasing). The limitations of the paper are the result of its very nature: it is a largely conceptual paper. Empirical research is therefore needed to test and validate the essentially preliminary framework. For our overseas readers, we then present the insights from this paper in Spanish, French, Portuguese, and German.