Finance and Economics Discussion Series · 1998 · 277 citations · 137 references
BusinessBusiness EconomicsEconomicsCapital StructureFinancial EconomicsPrivate EquityCapital FormationCapital MarketsCapital Structure AnalysisCapital Structure DeterminantsCapital Structure TheorySmall BusinessBusiness Equity FinancingCorporate Financing BehaviorMacroeconomic ConditionsMacroeconomic ImpactsPrivate Debt MarketsSmall Business FinanceSmall Enterprise FinanceSmall Firm Financing
Small firms are analyzed through a financial growth‑cycle lens, where optimal capital structures shift over time and macroeconomic conditions influence interconnections among financing sources. The study investigates the economics of small‑business financing in private equity and debt markets, while also reviewing policy issues, literature, and proposing future research directions. The authors conduct a literature review of research and policy issues and propose future research topics. The study identifies the sources of small‑business finance and demonstrates that capital structure varies with firm size and age.
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.
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