Loading...
SMES, FDI and financial constraints
De Maeseneire, Wouter Claeys, Tine
De Maeseneire, Wouter
Claeys, Tine
Citations
Altmetric:
Publication Type
Working paper
Editor
Supervisor
Publication Year
2007
Journal
Book
Publication Volume
Publication Issue
25
Publication Begin page
Publication End page
Publication NUmber of pages
51
Collections
Abstract
This paper explores the problems experienced by small and medium-sized enterprises (SMEs) with international ambitions in gaining access to debt and equity finance for foreign direct investment (FDI) projects. We develop several arguments why such small businesses are expected to face severe financing constraints for foreign investments and provide an explorative empirical analysis of these issues for a sample of thirty-two Belgian SMEs. We find that the market of FDI finance for SMEs is subject to considerable capital market imperfections. The information problems, lack of collateral, the home bias of financiers and the capital gearing method used by banks to evaluate small firms' foreign projects give rise to financial constraints. The FDI finance gap hinders SMEs in their internationalization strategy and negatively affects their economic performance.
Research Projects
Organizational Units
Journal Issue
Keywords
Corporate Finance, Small Business Financing, SMEs, FDI, Internationalization, Financing Constraints