SMEs growth and financing sources: Does austerity gone a bad fairytale?

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Following the European Sovereign Debt Crisis, the empirical evidence obtained about SMEs’ growth determinants allows us to conclude that: 1) stimulating factors are: cash-flow and GDP; 2) restrictive factors are: debt, size, age and the interest rate; and 3) in the period after 2008, the financial crisis and implementation of austerity measures, in the Portuguese context, produced a negative effect on SME growth. In the period 2008-2012, i.e., after the beginning of the financial crisis, cash flow has less importance, while debt is found to have a stronger negative effect on SME growth, compared to the pre-crisis period. The empirical evidence also lets us make important suggestions of policy guidance for SMEs.

João Leitão University of Beira Interior & CEG-IST, University of Lisbon