Florencio Lopez de Silanes, Joseph McCahery, Dirk Schoenmaker, Dragana Stanišić, Friday, August 21, 2015

While small and medium-sized enterprises are important for economic growth and employment, we have little insight in their financing needs. Using a novel methodology, this column presents new research that estimates the gap between demand and supply of financing in several European countries. We find that the financing gap is three to five times larger than that of US SMEs. Initiatives under the Capital Markets Union umbrella can help to reduce this financing gap.

Ross Levine, Chen Lin, Wensi Xie, Wednesday, July 29, 2015

Some have argued that the stock market serves as a ‘spare tire’ during banking crises by providing an alternative corporate financing channel. This column examines the claim using data for 36 countries spanning 20 years. The findings support the three core predictions of the spare tire view, suggesting that countries can insulate parts of their economy from future banking crises by designing appropriate legal frameworks.

Alex Edmans, William Mann, Saturday, February 15, 2014

All firms need capital. Much research addresses the choice between issuing various types of securities – for example, between issuing debt and equity. However, another method of financing has received relatively little attention – selling non-core assets, such as property, divisions, or financial investments. This article explains the conditions under which an asset sale is the preferred means of raising capital, and highlights how a manager should go about deciding between selling assets and issuing securities.