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To What Extent Do Regional Effects Influence Firms’ Capital Structure? The Case of Southern Italian SMEs’

Department of Political Science, University of Campania “L. Vanvitelli”, 81100 Caserta, Italy
Author to whom correspondence should be addressed.
Int. J. Financial Stud. 2019, 7(1), 3;
Received: 20 October 2018 / Revised: 21 December 2018 / Accepted: 24 December 2018 / Published: 4 January 2019
There is tremendous interest, in the economic literature, for the determinants of firms’ capital structure decisions. A rich body of empirical works now exists that purports to identify firm- and country-level factors affecting firms’ financing patterns. In addition, more recently, a new stream of studies has emerged that investigates cross-regional variation in small firms’ capital structure. While small firms’ leverage does seem to vary across regions, at least in countries where significant regional differences in economic and financial development and in the quality of institutions exist, not much yet is known about variation in debt maturity, in debt in relation to equity, and between different types of small firms. The present paper aims to fill this gap through an empirical analysis of cross-regional variation in the capital structure of a sample of about 30,000 Italian small firms over a 13-year period, including the aftermath of the credit crunch that followed the 2007–2008 global financial crisis. The findings confirm the view that small firms in underdeveloped regions are more financially constrained, but also amend some of the results shown in the literature, in particular by showing how small firms in Italy’s Southern regions have higher levels of equity and fixed assets than small firms in other regions. View Full-Text
Keywords: capital structure; leverage; SMEs; cross-regional variation capital structure; leverage; SMEs; cross-regional variation
MDPI and ACS Style

Butzbach, O.; Sarno, D. To What Extent Do Regional Effects Influence Firms’ Capital Structure? The Case of Southern Italian SMEs’. Int. J. Financial Stud. 2019, 7, 3.

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