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| Author: | Sarno, D. |
| Title: | Liquidity constraint on the production of firms in Southern Italy |
| Journal: | Small business economics
2005 : SEP, VOL. 25:2, p. 133-146 |
| Index terms: | liquidity constraints small and medium-sized enterprises (smes) regional differences Italy |
| Language: | eng |
| Abstract: | This study shows how small and medium enterprises located in the less developed regions of Southern Italy face higher liquidity constraints compared to the companies in the Central-Northern Italian regions. The reasons for these constraints are the undersized nature of companies and higher risk of business activity. Consequently, credit rationing is more extensive. To analyse the effects on the potential growth of companies' production, a simple model is presented, followed by estimates of growth. The findings confirm the existence of a bottleneck of financial resources devoted to current finance production that limits the accumulation of working capital even when faced with favourable market opportunities. |
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