Equity financing and SME growth: evidence from the Eurozone
by Ribal Rizk; Mario Sassine
International Journal of Work Innovation (IJWI), Vol. 4, No. 3, 2023

Abstract: This paper examines the impact of equity financing on SMEs' short-term, long-term, and future growth. In particular, the effects of equity capital access, stability, and depth/efficiency were investigated. The sample of SME is selected from the European Commission and European Central Bank (ECB) Survey on Access to Finance of Enterprises (SAFE). Only 19 countries are retained because they belonged to the euro area at the time of the interview. For this paper, the surveys from the second half of each year over the period 2014-2021 are considered. The latter resulted in an unbalanced panel data for 1,935 SMEs. This paper shows that only equity capital stability has a positive impact on short-term growth (organisation of management and sales), long-term growth (employment and turnover), and future growth (turnover). This paper does not treat equity financing as a single measurement. It segregates it into three dimensions, namely equity capital access, equity capital stability, and equity capital depth/efficiency. In doing so, it contributes to the voluminous scholarly work by a deeper understanding and insight of the different dimensions of equity financing. Its findings are beneficial for both practitioners and policy makers in terms of managing and engineering equity financing.

Online publication date: Mon, 11-Sep-2023

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