Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/323679 
Year of Publication: 
2025
Citation: 
[Journal:] Small Business Economics [ISSN:] 1573-0913 [Volume:] 65 [Issue:] 1 [Publisher:] Springer US [Place:] New York, NY [Year:] 2025 [Pages:] 451-473
Publisher: 
Springer US, New York, NY
Abstract: 
This study analyzes the dynamics of financing constraints under changing economic conditions and the role of firm size in this context. Using administrative data from Germany, we quantify financing constraints expressed as the probability that a firm encounters excess demand or excess supply. On average, small- and medium-sized enterprises (SMEs) are indeed more likely than larger firms to face excess demand for loans. Using the Great Financial Crisis as an empirical setting, we show that tightening financing conditions do not affect smaller firms disproportionally, but generally risky borrowers. Importantly, post-crisis trends in debt-ratios, profitability, investments, and employment are similar irrespective of firm size, while smaller firms respond to the economic slowdown by persistently building up cash buffers. Our results urge policymakers to consider specific characteristics of bank-dependent firms to assess their exposure to economic crises—instead of focusing on size as vulnerability criteria per se.
Subjects: 
Financial constraints
SME financing
Firm-level data
Bank financing
Small business resilience
JEL: 
D22
D53
G01
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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