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 capital structure. However, the majority of academic interest is focused on the internal (company) determinants of capital structure, and much less on external environment determinants, such as restricted access to financial resources; especially for micro, small and medium-sized companies (SMEs). As a small country, and member of the EU and Eurozone, Slovenia provides an ideal setting for the study of the impact of the 2008 financial and economic crisis on the capital structures of SMEs; especially given the dominance of the banking sector, as the prime financing vehicle for companies. In this context we employ a novel power analysis estimation approach in the literature, employing Cohen’s d and McGraw-Wong’s common language (CL) effect size statistics. We analyzed the capital structures of Slovenian SMEs between 2006 and 2009. Our study shows that SMEs were unable to tap into “soft budget constraints” made available by the banking sector to large companies, and have been correspondingly harder hit by the crisis.