Financial development and financial structure of industrial SMEs : the case of Greece

The aim of this paper is to investigate the determinants of capital structure for the Greek manufacturing SMEs (1-100 employees). Various theories on the determinants of capital structure of SMEs are discussed and findings of previous empirical studies are examined. This study is based on a panel data set consisted of a random sample of 142 manufacturing SMEs in Greece for the time span 1989-1996. A non-linear regression model was developed with total debt; short-term debt and long-term debt ratios used as dependent variables. Enterprise size, profitability, asset structure, liquidity, average inventory period and accounts receivables collection period are found to have a significant effect on the capital structure of Greek manufacturing SMEs. A number of policy implications are suggested by the findings, which will improve the viability, growth and competitiveness of the manufacturing SME sector in Greece.peer-reviewe