For example, only 34% used
external finance in the first half of 2018, a decline on the same period in 2017, and nearly half of all SMEs say they never think about whether they could or should use more
external finance.
Another one of the key issues identified by the British Business Bank in its report is the need for fast-growing businesses to gain access to equity finance, especially given that research studies show that firms are more likely to grow when
external finance is accessed, especially when they are in innovative high-risk sectors.
To address this concern, we use a firm's level of
external finance dependence as a measure of its size of financing need (Demirguc-Kunt and Maksimovic, 1998; Ross et al., 2009).
'Recent policy actions, including an agreement with the IMF staff on a forthcoming programme, should ease
external finance risks, but reserve levels will take time to rise and the programme will face significant implementation risks,' it said.
LAHORE -- Fitch on Wednesday said
external finance risks could constrain the new incoming PTI government
However, the dependence of exports on
external finance can be greater than in the case of domestic production, for three reasons (Chor and Manova, 2012): (i) exports are associated with some sunk and fixed specific costs (such as learning about export opportunities, making investments specific to foreign markets, or establishing distribution networks abroad); (ii) international transactions take usually a longer time than domestic transactions do; and (iii) many international transactions require insurance due to additional risks as compared to domestic transactions.
For many developing countries, FDI has become the largest source of
external finance, surpassing official development assistance, remittances or portfolio investment ?ows.
Moody's, however, said 'dependence on
external finance poses a vulnerability for some countries,' especially since the Brexit is expected to result in volatile markets globally.
In a statement, Fitch said that the rating came from a combination of Morocco's macro-stability, neutral public and
external finance indicators relative to 'BBB-' rated peers, and weak structural indicators.
Lender firms possess enough internal assets (capital and industrial consumables) to reach the optimum scale of capital investment; however, investor firms demand
external finance to cover the optimum scale of investment.
how the rate of use of
external finance sources affects the return on equity.
