Financing SMEs in the digital economy: Barriers to public equity funding from the National Stock Exchange of Australia

Abstract

Lack of access to finance presents a major setback to development of the SME sector in Australia (Xiang et al., 2011). Nonetheless, there is general contention that the problems that hinder SME access to finance emanate from the demand side (North et al., 2010; Vos et al., 2007; Beck & Demirguc-Kunt, 2006). It is posited that SMEs have a pecking order of preference for external finance; they prefer internal equity to debt and debt to external equity, and rarely use external equity (Myers & Majluf, 1984; Berger & Udell, 1998; Myer, 2001; Lemmon & Zender, 2010). This position notwithstanding, there is evidence of an increasing and unmet demand for external equity by the bigger end of the SME sector.