The impact of internal finance on growth empirical evidence from Swedish firm level data

Abstract

This paper examines the impact of firms’ internal liquidity access and related firm characteristics on the growth of Swedish micro firms across six industry sectors, based on a database of over 62,000 observations covering 10,383 Swedish micro firms over the 2007–2008 period. Using a seemingly unrelated regression model with four explanatory variables (i.e., liquidity access, size, age, and industry affiliation), this study found a significant relationship between growth and the explanatory variables. Consistent with much previous research, this paper demonstrates that liquidity access positively affects firm growth. Furthermore, other firm-level variables, such as size, age, and industry affiliation, significantly affect firm growth. This article contributes to the literature by employing a seemingly unrelated regression model to analyse a comprehensive, cross-sectoral sample.