Liquidity Constraint on the Production of Firms in Southern Italy |
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Authors: | Email author" target="_blank">Domenico?SarnoEmail author |
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Institution: | (1) Seconda Universita’ Di Napoli Facolta’ Di Economia, Piazza Unberto I, 81043 Capua, Italy |
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Abstract: | The paper shows how small and medium enterprises located in the less developed regions of Southern Italy face higher liquidity
constraints compared to the firms in the Central-Northern Italian regions. The reasons for these constraints are the undersized
nature of firms and higher risk of business activity. Consequently, credit rationing is more extensive. In order to analyse
the effects on the potential growth of firms’ production, a simple model is presented, followed by estimates for growth. The
results 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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Keywords: | |
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