How do firms fund their investment? Firm size and funding mix.
Lé Mathias  1@  , Frederic Vinas  2  
1 : Banque de France  (BdF)
Banque de France
2 : Banque de France  -  Site web
Banque de France
31 rue Croix des petits champs 75001 PARIS - France -  France

We measure how firms fund their investment in fixed assets depending on their size. Relying on a unique database covering a large range of firms (more than 60,000 manufacturing firms) from small firms (less than EUR 1 million sales) to the top largest firms. We find that the average firm finances 48% of new fixed assets with new bank credit, 19% with equity and retained earnings, 15% with trade payables, 10% with other financial debt and 8% with residual liabilities. But that average funding mix covers very different situations. The 25% smallest firms rely essentially on bank credit (55% of new fixed assets) and retained earnings (14%), while the 5% largest firms rely on a diversified and balanced funding mix with an equal share of bank credit, equity and other financial debt.


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