This paper investigates the real effect of short-term financial constraints on small and medium-sized enterprises (SMEs). Under the working capital channel, cash credit constraints force entrepreneurs to forgo investment opportunities in order to finance their working capital needs. Building on survey data, I find that short-term credit constraints are as important as long-term ones in SMEs’ investment decisions. Besides, the detrimental effect of cash credit constraints on corporate investment is stronger for SMEs with higher increase in working capital needs but lower for liquid ones that are able to adjust their accounts receivable and inventories. My results suggest that short-term finance is a major issue for SMEs.

Plain English Summary

Short-term credit constraints turn out to be as important as long-term ones in SMEs’ investment decisions. Building on survey data, this paper investigates the real effects of short-term financial constraints on small businesses through an under-explored transmission mechanism. While the bulk of research on the effects of financial constraints focuses on long-term liabilities, I stress the importance of short-term finance. Owing to the competition between working and fixed capital in cash-flow uses, cash credit constraints force entrepreneurs to allocate additional cash-flow to finance the increase in their working capital needs to the detriment of long-term assets.The main implication of this work is that supports for short-term financing would provide a significant boost to long-term investment and economic growth.

本文研究了短期财务约束对中小企业的实际影响。在周转资金渠道下，现金信贷限制迫使企业家放弃投资机会，以满足其周转资金需求。根据调查数据，我发现在中小企业的投资决策中，短期信贷约束与长期信贷约束一样重要。此外，现金信贷约束对公司投资的不利影响，对于具有较高周转资金需求的中小企业而言更为明显，而对于能够调整其应收账款和库存的流动性中小企业而言，现金信用约束条件对企业投资的不利影响则更大。我的结果表明，短期融资是中小企业的主要问题。

普通英语摘要

在中小企业的投资决策中，短期信贷约束与长期信贷约束一样重要。本文基于调查数据，通过未充分研究的传播机制研究了短期财务约束对小企业的实际影响。尽管有关财务约束影响的研究主要集中于长期负债，但我强调了短期财务的重要性。由于现金流量用途中的营运资金和固定资金之间存在竞争，现金信贷限制迫使企业家分配额外的现金流量，以筹集增加的营运资金需求，从而损害长期资产。是支持短期融资将大大促进长期投资和经济增长。