SMEs: Externally and Internally Constrained? Evidence from Argentina

ANAHÍ BRIOZZO; HERNÁN VIGIER; LISANA B. MARTINEZ; ANTONIO TERCEÑO

Nesserbar

Congreso; Sixth International Conference; 2014

Bulgarian Association for Management Development and Entreprenuership

This paper identifies three distinctive cases in small and medium enterprises (SME) financing decisions: trade-off behavior, pecking order behavior, and extreme aversion to debt. We compare the implications of these approaches with a dataset of firms from Bahía Blanca (Argentina) with the Multinomial Logit Model. We find that firm characteristics related to information asymmetries (firm age, size and legal form, as well as personal factors (owner?s age and education, and perception of bankruptcy costs) are relevant variables in SME? financing behavior. These result show that both external and internal constraints contribute to explain SME? financing decisions in a developing country.