Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96221
Authors: 
Moro, Andrea
Lucas, Mike R.
Grimm, Uwe G.
Year of Publication: 
2012
Citation: 
[Journal:] The Journal of Entrepreneurial Finance (JEF) [ISSN:] 1551-9570 [Volume:] 16 [Year:] 2012 [Issue:] 1 [Pages:] 87-108
Abstract: 
The existing finance literature is inadequate with respect to its coverage of the debt structure of small and medi-um sized enterprises (SMEs). In addition, the role of trust in accessing finance for such enterprises is under-investigated. This paper presents a mathematical model for optimizing the debt structure of SMEs that, since SMEs are often equity constrained, focuses on optimizing debt structure by minimizing its cost. The model is then extended by incorporating the level of trust that suppliers and bank managers have in the enterprise. The extended model, suggests that the higher the level of trust that bank managers and suppliers have in the SME, the more short-term finance an SME can obtain and should use.
Subjects: 
SMEs
Capital Structure
Trade Credit
Bank Debt
Trust
JEL: 
G21
G32
M13
Document Type: 
Article

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