Short Term Debt in Spanish Smes
Instituto Valenciano de Investigaciones Economicas Working Paper No. WP-EC 2004-12
26 Pages Posted: 7 May 2004
Date Written: April 2004
This paper analyses the debt maturity structure of the small and middle sized firms using the trade-off reward risk associated to the use of short-term loans. Therefore, a sample of 11.533 small and middle Spanish manufacturing firms from year 1997 through 2001 was used. The results of our study show that short-term loans are more frequent in firms with greater financial strength and greater financial flexibility, major growth options and when the interest cost differential between short-long term is more pronounced. Also, the firm size seems to have an influence on the level of short-term loans, it being higher in the smaller firms.
Keywords: SMEs, debt maturity, financial solvency, financial flexibility
JEL Classification: G3, G32
Suggested Citation: Suggested Citation