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The Economics of Small Business Finance: The Roles of Private Equity and Debt Markets in the Financial Growth Cycle

69 Pages Posted: 27 Nov 1998  

Allen N. Berger

University of South Carolina - Darla Moore School of Business; Wharton Financial Institutions Center; European Banking Center

Gregory F. Udell

Indiana University - Kelley School of Business - Department of Finance

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Abstract

We examine the economics of financing small business in private equity and debt markets. Firms are viewed through a financial growth cycle paradigm in which different capital structures are optimal at different points in the cycle. We show the sources of small business finance, and how capital structure varies with firm size and age. The interconnectedness of small firm finance is discussed along with the impact of the macroeconomic environment. We also analyze a number of research and policy issues, review the literature, and suggest topics for future research.

JEL Classification: G21, G28, G34, E58, L89

Suggested Citation

Berger, Allen N. and Udell, Gregory F., The Economics of Small Business Finance: The Roles of Private Equity and Debt Markets in the Financial Growth Cycle. Available at SSRN: https://ssrn.com/abstract=137991 or http://dx.doi.org/10.2139/ssrn.137991

Allen N. Berger (Contact Author)

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States
803-576-8440 (Phone)
803-777-6876 (Fax)

Wharton Financial Institutions Center

Philadelphia, PA 19104-6367
United States

European Banking Center

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Gregory F. Udell

Indiana University - Kelley School of Business - Department of Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States

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