Spatial variations in financial constraints of SMEs—evidence from firm-level estimates of investment-cash flow sensitivities in Sweden
(2023) In Small Business Economics 60(4). p.1683-1698- Abstract
It is well established that there is uneven availability of credit across space, in particular for SMEs. The evidence on whether this translates into differences in actual business investments remains scarce. We assess this question by using firm-level data for Swedish firms and estimate the extent to which the average investment-cash flow sensitivities of firms vary across the urban–rural hierarchy. We find that the world of financing is not yet flat for the majority of Swedish SMEs. Companies located in non-metro regions are most dependent on own cash flow in their investments. The results hold for all firms, firms of different sizes, firms operating in low-end services, unaffiliated firms and those belonging to domestic corporations.... (More)
It is well established that there is uneven availability of credit across space, in particular for SMEs. The evidence on whether this translates into differences in actual business investments remains scarce. We assess this question by using firm-level data for Swedish firms and estimate the extent to which the average investment-cash flow sensitivities of firms vary across the urban–rural hierarchy. We find that the world of financing is not yet flat for the majority of Swedish SMEs. Companies located in non-metro regions are most dependent on own cash flow in their investments. The results hold for all firms, firms of different sizes, firms operating in low-end services, unaffiliated firms and those belonging to domestic corporations. In contrast, investment-cash flow sensitivity of firms operating in high-tech services and those belonging to a multinational enterprise does not differ geographically. On average, regional investment-cash flow sensitivity is lower in bigger, denser and more educated local labour market regions; it is higher in regions with greater concentration of SMEs.
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- author
- Andersson, Martin LU ; Eklund, Johan E. and Tsvetkova, Alexandra
- organization
- publishing date
- 2023
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- Access to finance, Financial constraints, Investment decisions, SMEs, Sweden, Urban–rural continuum
- in
- Small Business Economics
- volume
- 60
- issue
- 4
- pages
- 1683 - 1698
- publisher
- Springer
- external identifiers
-
- scopus:85137497065
- ISSN
- 0921-898X
- DOI
- 10.1007/s11187-022-00673-y
- language
- English
- LU publication?
- yes
- id
- 39e08822-60ec-41db-850d-42c1eadafe7c
- date added to LUP
- 2022-10-21 13:54:13
- date last changed
- 2024-01-18 16:56:49
@article{39e08822-60ec-41db-850d-42c1eadafe7c,
abstract = {{<p>It is well established that there is uneven availability of credit across space, in particular for SMEs. The evidence on whether this translates into differences in actual business investments remains scarce. We assess this question by using firm-level data for Swedish firms and estimate the extent to which the average investment-cash flow sensitivities of firms vary across the urban–rural hierarchy. We find that the world of financing is not yet flat for the majority of Swedish SMEs. Companies located in non-metro regions are most dependent on own cash flow in their investments. The results hold for all firms, firms of different sizes, firms operating in low-end services, unaffiliated firms and those belonging to domestic corporations. In contrast, investment-cash flow sensitivity of firms operating in high-tech services and those belonging to a multinational enterprise does not differ geographically. On average, regional investment-cash flow sensitivity is lower in bigger, denser and more educated local labour market regions; it is higher in regions with greater concentration of SMEs.</p>}},
author = {{Andersson, Martin and Eklund, Johan E. and Tsvetkova, Alexandra}},
issn = {{0921-898X}},
keywords = {{Access to finance; Financial constraints; Investment decisions; SMEs; Sweden; Urban–rural continuum}},
language = {{eng}},
number = {{4}},
pages = {{1683--1698}},
publisher = {{Springer}},
series = {{Small Business Economics}},
title = {{Spatial variations in financial constraints of SMEs—evidence from firm-level estimates of investment-cash flow sensitivities in Sweden}},
url = {{http://dx.doi.org/10.1007/s11187-022-00673-y}},
doi = {{10.1007/s11187-022-00673-y}},
volume = {{60}},
year = {{2023}},
}