Working Paper Series: Special Edition of 2016 to 2018 Interns

finance. Private commercial and state banks account for 12.97 per cent and 3.37 per cent of working capital financing while other sources account for 3.1 per cent of financing respectively. State owned banks continue to be one of the least utilized sources of financing among firms. Table 7 (appendix 1C) summarizes the mean proportion of fixed capital financing by firms. From table 7 it is observed that internal funds make up the bulk of firms total fixed capital financing at 69.9 per cent. This is consistent with the findings by Chen & Jung (2011) who found that firms preferred internal financing to fund new projects and would only turn to debt when internal capital is insufficient. Commercial banks make up the second largest share of financing for fixed capital at 23.0 per cent, while other sources account for 7.0 per cent. Small and medium firms are observed to use more other informal sources of financing such as moneylenders, angel investors and family and friends. This is partly due to the relaxed collateral requirements and relationship these parties might share with the firms’ owner, which allows them to access financing with less restrictions. Tables 8 & 9 (appendix 1C) illustrate the percentage of firms with an overdraft facility and a loan facility. In table 8, it is observed that 54.7 per cent of small firms and 63.1 per cent of medium firms have an overdraft facility compared to 54.3 per cent for large firms. Overall, 57.9 per cent of the total observed firms have an overdraft facility. From table 9, on average 35.0 per cent of small and medium firms have a loan facility, whereas 43.0 per cent of large firms have a loan or credit facility. Overall, 35.8 per cent of firms are observed to have a loan or credit facility. Table 10 (appendix 1C) summarizes the access to financing obstacles of firms. It is observed that 5.7 per cent of large firms reported access to finance as an obstacle compared to 0.26 per cent who reported that it was not an obstacle. For small and medium firms 52.3 per cent and 34.2 per cent reported that access to finance was an obstacle to operations as opposed to only 3.76 per cent of firms in both categories who reported that it was not an obstacle. Overall 92.2 per cent of the sampled firms in the ECCU found that access to finance was an obstacle to operations. 5.3 Regression Results Table 11 (appendix 2A) summarizes the findings of the analysis for the full sample of firms in the CARICOM region. For the supply side, it is observed that the coefficients on small and medium firms are negative and in line with existing studies in the literature. It is also in harmony with our

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