Research Handbook on Entrepreneurial Finance
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Research Handbook on Entrepreneurial Finance

Edited by Javed Ghulam Hussain and Jonathan M. Scott

Drawing upon current cutting-edge theories, knowledge and research findings, this Handbook provides an analysis of the interaction between small and medium-sized enterprises (SMEs), entrepreneurs and financial institutions globally. The contributors consider regional and international perspectives within and between Europe, North America, New Zealand, the Middle East, as well as South, Central and East Asia on a chapter-by-chapter basis. In so doing, they provide a contextualized, up-to-date snapshot of research into entrepreneurial finance across the world.
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Chapter 5: Small and medium-sized enterprises and their capital structure decisions in Turkey: a literature review

Dilek Demirbaş and Safa Demirbaş


Only a limited number of studies have examined the capital structures of small and medium-sized enterprises (SMEs) in Turkey, an economy that has a high level of dependency on small firms. The results of this chapter suggest that Turkish SMEs encounter obstacles in raising finance. Financial constraints are a handicap for SMEs to improve and develop their business environment. Information asymmetry and the uncertain economic environment are barriers to access credit from external formal sources. On the other hand, SME owners are reluctant to take external finance for projects with positive net present values to retain control their over enterprises. The main purpose of this study is to investigate the issue of the financing of SMEs in Turkey from the theoretical perspective in order to evaluate the present position objectively and to make policy recommendations. The results of this study are similar to those reported for most Western economies; that is, SME owners follow a pecking order theory and prefer retained profit to external finance.

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