Overview and Estimation of the 2008 Financial and Economic Crisis ‘Effect Size‘ on SME Capital Structures: Case of Slovenia

Abstract

Myriad factors have been identified to impact a company's capitalstructure. However, the majority of academic interest is focused on theinternal (company) determinants of capital structure, and much less onexternal environment determinants, such as restricted access tofinancial resources; especially for micro, small and medium-sizedcompanies (SMEs). As a small country, and member of the Ell andEurozone, Slovenia provides an ideal setting for the study of the impactof the 2008 financial and economic crisis on the capital structures ofSMEs: especially given the dominance of the banking sector, as the primefinancing vehicle for companies. In this context we employ a novel poweranalysis estimation approach in the literature, employing Cohen's d andMcGraw-Wong's common language (CL) effect size statistics. We analyzedthe capital structures of Slovenian SMEs between 2006 and 2009. Ourstudy shows that SMEs were unable to tap into ``soft budgetconstraints{''} made available by the banking sector to large companies,and have been correspondingly harder hit by the crisis.