Capital structure and growth of the firms in the backward regions of the south Italy

• Autores: Domenico Sarno
• Localización: Applied financial economics, ISSN 0960-3107, Vol. 18, Nº. 10-12, 2008, págs. 821-833
• Idioma: inglés
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• Resumen

  • In this article it is shown that the growth of southern Italian firms is financed mostly by internal finance, since external financing is more problematic and costly. Hence firm growth is subject to financial constraints. The economics of financial constraints deals with the relationship of financial structure to firm growth. Consequently, the 'financial growth cycle' is used to analyse the features of the capital structure of the Mezzogiorno's SMEs compared to Italy-wide SMEs. The growth-cash flow nexus is then empirically analysed by using the Gibrat growth model enriched by the cash flow variable.