The impact of financing on the investments of SMEs: evidence from the recent financial crisis

This paper examines how the recent financial crisis has affected the investments of Small and Medium-sized Enterprises (SMEs). We use a novel dataset of private firms from the Netherlands covering a long time-period (2004-2012). The results show that the financial crisis has no significant impact on the investments of SMEs. When we distinguish between the influences of internal financing (cash flows) and external financing (bank debt), we find that investment of SMEs are constrained by the availability of the cash flows and more determined by bank debt irrespective of the financial crisis.