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Public provision of sales contingent claims backed finance to SMEs: a policy alternative
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Kaivanto, Kim and Stoneman, Paul (2007) Public provision of sales contingent claims backed finance to SMEs: a policy alternative. Research Policy, Vol.36 (No.5). pp. 637-651. doi:10.1016/j.respol.2007.01.001
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Official URL: http://dx.doi.org/10.1016/j.respol.2007.01.001
Abstract
In Europe (and elsewhere) governments intervene to stimulate innovation in the SME sector, and because SMEs face financial constraints in particular, governments encourage the provision of debt and equity (venture capital) finance to such firms. This paper discusses sales contingent claim (SCC backed finance - funding secured only on a claim written on sales - that offers a different repayment profile to debt and equity. The attractiveness of such finance to firms as well as the behaviour of firms financed in this way are analysed. For various reasons SCC-backed financial instruments are generally not available to SMEs on the market, but it is argued that wider availability could further stimulate the growth and innovative activity of SMEs. The correction of this market incompleteness by the introduction of government schemes providing SCC-backed corporate finance for SMEs in higher risk (higher tech) sectors is recommended. The workability of such a scheme is explored by looking at existing examples aimed largely at project finance for larger firms. (c) 2007 Elsevier B.V. All rights reserved.
| Item Type: | Journal Article | ||||
|---|---|---|---|---|---|
| Subjects: | H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management H Social Sciences > HD Industries. Land use. Labor |
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| Divisions: | Faculty of Social Sciences > Warwick Business School > Marketing & Strategic Management | ||||
| Journal or Publication Title: | Research Policy | ||||
| Publisher: | Elsevier BV | ||||
| ISSN: | 0048-7333 | ||||
| Official Date: | June 2007 | ||||
| Dates: |
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| Volume: | Vol.36 | ||||
| Number: | No.5 | ||||
| Number of Pages: | 15 | ||||
| Page Range: | pp. 637-651 | ||||
| DOI: | 10.1016/j.respol.2007.01.001 | ||||
| Status: | Peer Reviewed | ||||
| Publication Status: | Published | ||||
| Access rights to Published version: | Restricted or Subscription Access |
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