Small Firm Finance
Since the impetus of the small and medium sized enterprise (SME) sector, SMEs have been perceived as a key source of economic dynamism and they contribute significantly to the economic and political infrastructure of a country (Hussain et al, 2006). Against this backdrop, the financing of small and medium sized enterprises has received much notable attention where the behaviour of financial markets coupled with the idiosyncratic nature of SMEs has further heightened interest (Berger and Udell, 1998).
Contact person: Mary Cooke, Clare Kearney and Dr Sheila O Donohoe
A core tenet of SME finance has been the prominent role of financial institutional debt where through performing the classical functions of financial intermediaries i.e. screening, contracting and monitoring, banks assess business quality and reduce the enigma surrounding the informational opacity of these firms (Berger and Udell, 1998).
Inspecting their financing behaviour, emphasis is placed on the growth life cycle where the financial needs of SMEs are thought to remain contingent on growth, experience and the level of informational opacity such that these firms are perceived through a size, age, information continuum (Berger and Udell, 1998). Moreover, an additional avenue of research observes the financing patterns of SMEs through the lens of country specific characteristics where financial behaviour reflects the institutional variables of a nation, lending credence to the role of government policy coupled with a country’s lending infrastructure (Berger and Udell, 2006). In particular, in the absence of a robust legal and financial environment, informal sources including leasing and trade finance materialise albeit with the underdevelopment of a country’s infrastructure, limitations to these sources fail to close the financial gaps evident to small and medium sized firms (Beck et al, 2008).
The centre aims to focus on the key facets inherent to SME finance including the role of financial institutions, government policy, impact of European institutions and private sources of capital to extend our portfolio of knowledge and assist in establishing partnership between Irish SMEs and academia.